This paper provides a theoretical model for explaining the separation of ownership and control in firms. An entrepreneur hires a worker, whose effort is necessary for running a project. The worker's effort determines the probability that the project will be completed on time, but the worker...

We relate the design of contract law to the process of development. In this paper, contract law defines which private agreements are enforceable (i.e. are binding and enforced by courts) and which are not. Specically, we consider an economy where agents face a hold-up problem (moral hazard in...

This paper presents a model of political competition, where voter decisions are affected by their ideological adherence to political parties. We derive a number of interesting results: First, we show that an equilibrium exists even though voting is fully deterministic. Second, although...

In this paper we present a political economy approach in order to explain the degree of financial openness for an economy. In the model, entrepreneurs, who may have good or bad projects, vote for policies, which are proposed by selfi sh politicians. Two political frictions (ideological adherence...

We consider a general economy, where agents have private information about their types. Types can be multi-dimensional and potentially interdependent. We show that, if the interim distribution of types is common knowledge (the exact number of agents for each type is known), then a mechanism...

In this paper we provide a political game where agents decide whether to become legislators or politicians. Legislators determine the political institutions constraining politicians\' behavior and politicians compete for gaining the power to make decisions about the level of the public good. We...

In this paper, citizens vote in order to influence the election outcome and in order to signal their unobserved characteristics to others. The model is one of rational voting and generates the following predictions: (i) The paradox of not voting does not arise, because the benefi t of voting...

This paper provides a theoretical model for explaining the separation of ownership and control in firms. An entrepreneur hires a worker, whose effort is necessary for running a project. The worker\'s effort determines the probability that the project will be completed on time, but the worker...

We present a modified citizen-candidate model where the implemented policy arises from a compromise between the government and an unelected external power. We show that the two-candidate equilibria of this model differ significantly from the original: however small the cost of candidacy, the...