We consider an economy where individuals privately choose effort and trade competitively priced securities that pay off with effort-determined probability. We show that if insurance against a negative shock is sufficiently incomplete, then standard functional form restrictions ensure that...

In the present paper we study the efficiency properties of competitive equilibria in economies with hidden action and multiple goods. We borrow the description of the economy from Lisboa [3] and we apply a method of proof close in spirit to the one used in the literature on incomplete financial...

We consider optional TOU (time-of-use) pricing for residential consumers as an alternative to a single TOU or flat rate structure offered by a publicly regulated electricity supplier. A general equilibrium model is developed and used to explore and quantify the effects of optional pricing on...

We consider a problem of allocating multiple identical objects to a group of agents and collecting payments. Each agent may receive several objects and has quasi-linear preferences with a submodular valuation function. It is known that Walrasian mechanisms are manipulable. We investigate the...

We consider the multi-object allocation problem with monetary transfers where each agent obtains at most one object (unit-demand). We focus on allocation rules satisfying individual rationality, no subsidy, efficiency, and strategy-proofness. Extending the result of Morimoto and Serizawa (2015),...

This paper extends the dynamic Mirrlees model to general equilibrium and derives the optimal social insurance policies against persistent idiosyncratic risk over the life cycle. Agents are heterogeneous in their work ability, which is private information and evolves stochastically over time, and...

We consider an economy where individuals privately choose effort and trade competitively priced securities that pay off with effort-determined probability. We show that if insurance against a negative shock is sufficiently incomplete, then standard functional formrestrictions ensure that...

This paper considers an overlapping generations model in which capital investment is financed in a credit market with adverse selection. Lenders’ inability to commit ex-ante not to bailout ex-post, together with a wealthy position of entrepreneurs gives rise to the soft budget constraint...

I analyze a model of human capital development in the presence of peer effects. Parents invest in their child, and this investment conveys a positive externality upon the child’s peers. Parents also acquire wealth, which i) finances consumption, and ii) determines a child’s peer group. I...

In McLean and Postlewaite (2002), we analyzed pure exchange economies with asymmetrically informed agents. We defined a notion of informational size and showed that, when the aggregate information of all agents resolves nearly all the uncertainty regarding the state of nature, the conflict...