This paper examines uberrimae fidei (utmost good faith) with adverse selection in an insurance market. If consumers know their risk type (they know their expected loss), and if they understand the concept of uberrimae fidei, adverse selection is completely eliminated. However, if uberrimae fidei...

This paper develops a heterogeneous agents model to analyze the effects of Social Security survivors insurance. The model features a negative mortality-income gradient, asymmetric information of individual mortality rates, and a warm-glow bequest motive that varies by age and family structure....

The unconventional monetary policy actions of the Federal Reserve during the recent Global Financial Crisis often involve implicit subsidies to banks. This paper offers a theory of the non-neutrality of money associated with capital injection into banks via nominal transfers, in an environment...

This article presents a new capital structure model based on four factors well documented in literature: asymmetric information, taxes, bankruptcy costs and decision-makers' overconfidence. The model can simultaneously explain several facts about capital structure including those that remain...

In this article we analyze the remuneration mechanism for the reduction of energy losses, through a dynamic principal-agent model in continuous time. The agent represents the power distribution company, which makes investments, or in other words, makes an effort to reduce energy losses. The...

In this article we analyze the remuneration mechanism for the reduction of energy losses, through a dynamic principal-agent model in continuous time. The agent represents the power distribution company, which makes investments, or in other words, makes an effort to reduce energy losses. The...

In this article we propose a security-design problem in which risk neutral entrepreneurs make unobservable investment decisions while employing the investment funds of risk-neutral outside investor/creditor(s). Contracts are restricted to satisfy limited liability and monotonicity of the payment...

Motivated by the informational 'opacity' that often characterizes small firms, this article studies a security design problem in which outside investors are unable to observe entrepreneurs' investments decisions and their firms' net-worth, both before and after contracts are signed. The...

In this article we argue that asymmetric information can explain why seignorage is an inferior choice to debt for governments. We also argue that the Ricardian equivalence for governments is very similar to what the Modigliani-Miller proposition is for corporations. Our model is based on Bolton...

This paper shows that asymmetric information about the timing of earnings can affect corporate capital structure. It sheds some new light on two following questions: why may profitable firms be interested in issuing equity, and why does debt not necessarily signal a firm quality. These issues...