We relate the design of contract law to the process of development. In this paper, contract law defines which private agreements are enforceable (i.e. are binding and enforced by courts) and which are not. Specically, we consider an economy where agents face a hold-up problem (moral hazard in...

This paper provides a theoretical model for explaining the separation of ownership and control in firms. An entrepreneur hires a worker for providing eff ort to complete a project. The worker's eff ort determines the probability that the project is completed on time, but the worker receives...

This paper considers an economy with a public good where a decision must be made both about the level of the public good and the taxation imposed on each citizen (multidimensional policy space). In this context, we derive two interesting results: i) we show that a Nash equilibrium exists under...

We consider a general economy, where agents have private information about their types. Types can be multi-dimensional and potentially interdependent. We show that, if the realized frequency of types (the exact number of agents for each type) is common knowledge, then a mechanism exists, which...

I develop a simple, static general-equilibrium model with two classes of individuals, workers and entrepreneurs, and two goods. One good is in fixed supply, intrepreted as status-good, and the other is a standard, producible and consumable commodity. All prices are set by firm owners...

This paper derives conditions under which the introduction of a third-party agent solves the renegotiation-proofness problem of Moore and Repullo (1988)-type mechanisms, without introducing the potential for other agents to collude with the third-party. The key novelties of our mechanism are:...

Renegotiation of contractual agreements may lead to distortion of ex-ante incentives and inefficiencies. However, this problems can be circumvented in a credible way by the use of financial claims. The contracting parties ask financial markets (external claimants) to issue financial claims which...

In this paper, citizens vote in order to influence the election outcome and in order to signal their unobserved characteristics to others. The model is one of rational voting and generates the following predictions: (i) The paradox of not voting does not arise, because the benefit of voting does...

In this paper, citizens vote in order to influence the election outcome and in order to signal their unobserved characteristics to others. The model is one of rational voting and generates the following predictions: (i) The paradox of not voting does not arise, because the benefit of voting does...