This paper develops a model to analyse the Australian health insurance system when individuals differ in their health risk and this risk is private information. The Australian system involves mixed public and private health insurance with private insurance both duplicating and supplementing...

Credit card reform has been canvassed in Europe, the US and in Australia. The Reserve Bank of Australia (RBA) is in the process of implementing wide-ranging reforms to credit cards aimed at increasing entry, allowing merchants to surcharge for card payments and regulating the interchange fee -...

This paper provides a simple model of 'four party' payment systems designed to consider recent moves to regulate interchange fees and other rules of credit card associations. In contrast to recent formal analyses emphasising the role of network effects in the decisions of customer and merchants...

There has been considerable public debate over the effect of interchange fees on credit card transactions. Regulators in Australia and Europe have argued that these fees can be set by banks to have an anticompetitive effect. In the US, it has been argued that these fees, together with a rule...

This paper analyzes the optimal use of short and long-term share prices in management incentive contracts. We assume that the short-term share price is determined even before the manager has made her effort choice and, therefore, cannot be informative in the standard principal-agent sense. We...

Principal-agent theory suggests that a manager should be paid relative to a benchmark that removes the effect of market or sector performance on the firm's own performance. Recently, it has been argued that we do not observe such indexation in the data because executives can set pay in their own...

Academics have long argued that incentive contracts for executives should be indexed to remove the influence of exogenous market factors. Little evidence has been found that firms engage in such practices, also termed quot;relative performance evaluationquot;. We argue that firms may not gain...