Social choice theory is concerned with the evaluation of alternative methods of collective decision-making, as well as with the logical foundations of welfare economics. In turn, welfare economics is concerned with the critical scrutiny of the performance of actual and/or imaginary economic...

The phenomenon of "choice shifts" in group decision-making is fairly ubiquitous in the social psychology literature. Faced with a choice between a ``safe" and ``risky" decision, group members appear to move to one extreme or the other, relative to the choices each member might have made on her...

We develop a Savage-type model of choice under uncertainty in which agents identify uncertain prospects with subjective compound lotteries. Our theory permits issue preference; that is, agents may not be indifferent among gambles that yield the same probability distribution if they depend on...

This paper characterizes optimal income tax and audit schemes in the presence of costly enforcement when the agent is risk averse and not necessarily risk neutral. It is shown that the results under risk-neutrality (Chander and Wilde (1998)) largely hold under risk aversion. We first show that...

This paper compares Bayesian decision theory with robust decision theory where the decision maker optimizes with respect to the worst state realization. For a class of robust decision problems there exists a sequence of Bayesian decision problems whose solution converges towards the robust...

The fact that the expected payoffs on assets and call options are infinite under most log-stable distributions led Paul Samuelson and Robert Merton to conjecture that assets and derivatives could not be reasonably priced under these distributions, despite their many other attractive features....

A parental seller with market power to some degree in its product market can earn rents. In this context, there is a gain to granting credit for the purchase of the product and thus the establishment of captive finance company for expanding the sales by offering loans to consumers who need...

Price caps are a popular form of monopoly price regulation. One of its disadvantages is the perverse incentives that regulated firms might have to scamp on cost reducing effort during the last years before a price review. In order to avoid this problem a “rolling cap†contract was...

This paper models the supply of perishable goods within a randon framework. Perishability affects a large group of goods usually traded in the economy such as fruits and vegetables, newspapers, medicine drugs, a.s.o.. Surprisingly, one cannot find in the literature a decision model for suppliers...

A crucial assumption in the optimal auction literature has been that each bidder's valuation is known to be drawn from a single unique distribution. In this paper we relax this assumption and study the optimal auction problem when there is ambiguity about the distribution from which these...