Can a bank increase its profit by subsidizing inactivity? This paper suggests this may occur, due to the presence of hidden information, in a monopolistic credit market. Rather than offering credit in a pooling contract, a monopolist bank can sort borrowers through an appropriate subsidy to...

Equality of opportunity is a political ideal which requires that ex-ante inequalities, and only those inequalities, should be eliminated. Justice requires leveling the playing field by rendering everyone's opportunities equal in an appropriate sense, and then letting individual choices and their...

Credit market imperfections can prevent the poor from making profitable investments. Under asymmetric information observable features, such as wealth and collateral, play an important role in determining who gets credit, in violation of the Equality of Opportunity principle. We define equality...

Credit market imperfections can prevent the poor from making pro table investments. Under asymmetric information observable features, such as wealth and collateral, play an important role in determining who gets credit, in violation of the Equality of Opportunity principle. We de ne equality of...

An opportunity egalitarian view focus not only on equality of outcomes but essentially on the means or opportunities to realize such outcomes. In this paper we propose a methodology to decompose an opportunity egalitarian Atkinson index by income sources seeking for a measure of overall equality...

We analyze mutual insurance arrangements (policies based on risk-sharing among a pool of policyholders) when consumers choose a self-insurance effort, that is an effort decreasing the size of any loss occurring. We consider both cooperative and non-cooperative strategies in the effort choice....

This paper investigates the role of higher order beliefs in the formation of exchange rates. Our model combines a standard macroeconomic dynamics for the exchange rates with a microeconomic specification of agents' heterogeneity and their interactions. The empirical analysis relies on a state...

In this paper we analyse a setup where consumers are heterogeneous in the perception of environmental quality. The equilibrium is verified in a setting with horizontal and vertical (green) differentiation. Profits are increasing in the misperception of quality, while, the investment in green...

This paper provides a simply theory to explain the impact of sanctions on a regime's policies and behavior. Sanctions are generally put to strip the target country from its available rents and weaken the government's stance against growing discontent in the population. We show however that...