The law of insurance contracts provides that if the policyholder is shown to have knowingly misrepresented material facts about his risks in his application, the insurer can cancel the contract ex post facto and refuse to pay any claims. This good faith principle is widespread, but implemented...

This chapter discusses tax policy in open economies. The chapter discusses the theory of optimum taxation in an economy open to international trade. Most formal models of optimum taxation assume away international trade. Its presence does not alter any basic issues or methods. The economic...

Paul Samuelson is probably the most important economist of the second half of the twentieth century. His research publications; his introductory textbook; his articles on topical questions of economic policy; and his interactions with numerous students, colleagues, policy makers, and the wider...

The paper begins with a brief overview of the theory of incentives, with special attention to issues that are important in the public sector, in general and human capital in particular. It then reviews some case studies and empirical studies of incentives in the public sector, examining how...

Three game theoretic issues of international trade and commercial policy are examined fro m the special perspective of small countries. In oligopolistic market s, the question is when their ability to remain credibly small player s can be an advantage. In negotiations about trade regimes, small...

Many recent stochastic dynamic models in economics and finance are based on the theory of Brownian motion and its control or regulation. A heuristic exposition of this theory is presented with emphasis given to Itô's Lemma, the calculation of expected values and the derivation of Smooth Pasting...

Decisions made under ongoing uncertainty and costly reversibility entail a range of the state variable where inaction is optimal, which in turn produces hysteresis--permanent effects of temporary shifts. The range is usually defined by nonlinear equations that need numerical solutions. In this...

Consider a world of traders separated in geographic, economic, or social space. Honest trade offers larger gains for more distant traders, but frequencies of meetings, and information flows about cheating, have local bias. Honesty is self-enforcing only between pairs of sufficiently close...

The authors develop a model of common agency with complete information and general preferences with nontransferable utility, and they prove that the principals' Nash equilibrium in truthful strategies implements an efficient action. The authors apply this theory to the construction of a positive...