This article reviews recent developments in revealed preference theory. It discusses the testable implications of theories of choice that are germane to specific economic environments. The focus is on expected utility in risky environments, subjected expected utility and maxmin expected utility...

We argue that societies sometimes choose not to enforce the law to gain 'flexibility'. Especially developing countries face a dilemma between discretion and commitment to only partially-contingent rules. Rules are good for incentives, but discretion may be more 'flexible'. We embed this dilemma...

Social security programs generally seek to provide insurance and to reduce poverty and inequality. Providing insurance requires little redistribution. But reducing inequality and alleviating poverty do require redistribution. To reduce inequality, programs must redistribute income, but...

The paper analyses the efficiency and the distributional effects of eliminating a tariff in a protected sector, in a Heckscher-Ohlin model of trade with costs of adjustment. The tariff can be eliminated at the onset or after a while. In case of postponing it the government may pre-announce the...

We present a simple model of a benevolent government that provides insurance to risk averse individuals. As in macroeconomics, commitment to fully contingent rules is better than discretion, but when the government can only commit to simple rules, discretion may be the best available option. The...

The authors show that labor market policies and institutions affect the effectiveness of economic reform programs. They compare annual growth rates across 119 countries, using data from 449 World Bank adjustment credits and loans between 1980 and 1996. The results indicate that countries with...

The paper analyses the efficiency and the distributional effects of eliminating a tariff in a protected sector, in a Heckscher-Ohlin model of trade with costs of adjustment. The tariff can be eliminated at the onset or after a while. In case of postponing it the government may pre-announce the...