—i.e., principal-agent frictions or un-internalized externalities in an environment of risk neutrality—are flawed. Even where risk is …/agencies) can be justified if private lenders are risk averse and because of the state’s comparative advantage over markets in … resolving the collective action frictions that hinder risk spreading. To exploit this advantage while keeping moral hazard in …

risk-dominance to select the leading government. Lastly, in the mixed case, the government for whom public goods are …

sufficient to determine both compensated and the total, uncompensated effects of an increase in risk on the voluntary provision …