We formulate and solve the problem of optimal mechanism-design by a principal facing adverse selection and moral hazard from different sources. The parties' decision problem is comprised of a publicly observable collective choice and a partially private social choice. As in agency with pure...

Many disasters are foreshadowed by insufficient preventative care. In this paper, we argue that there is a true problem of prevention, in that insufficient care is often the result of rational calculations on the part of agents. We identify three factors that lead to dubious efforts in care....

This study develops a general equilibrium model within which self revelation of ability - that is not accompanied by any signaling - is compatible with arrival at rational expectations equilibriums (REE). In the model, economic agents either are 'confident', 'overconfident', or 'under-confident'...

This paper studies information aggregation in financial markets with recurrent investor exit and entry. I consider a dynamic general equilibrium model of asset trading with private information and collateral constraints. Investors differ in their aversion to Knightian uncertainty: When...

We analyze a dynamic moral hazard problem in teams with imperfect monitoring in continuous time. In the model, players are working together to achieve a breakthrough in a project while facing a deadline. The effort needed to achieve a breakthrough is unknown but players have a common prior about...

We examine voluntary disclosure when the firm (“sender”) is risk-averse and uncertain about audience preferences. We show that some firms stay silent in equilibrium, in contrast to classic “unravelling” results. Silence reduces the sensitivity of a firm's payoff to audiences'...

Does the mere exposure of a subject to a belief elicitation task affect the very same beliefs that we are trying to elicit? Is it theoretically possible to guarantee that this will not be the case? In this paper, we introduce mechanisms that make it simultaneously strictly dominant for the...

We develop a simple model that describes individuals’ self-assessments oftheir abilities. We assume that individuals learn about their abilities from appraisalsof others and experience. Our model predicts that if communicationis imperfect, then (i) appraisals of others tend to be too positive,...

This paper investigates an extended version of Crawford-Sobel's (1982) communication game in which the principal can control the quality of the expert's information. We prove that the optimal quality of information is always bounded away from the full information and characterize the optimal...