Numerous laboratory experiments show that workers reciprocate to high wages with high effort, when there is perfect information on the surplus created. Recent field experiments, however, suggest that trust and reciprocity may be lower or absent when the information is incomplete. We report a...

We investigate the problem of subsidising afforestation when private information exists with respect to the level of private utility derived from the project. We develop a simple model that allows for an intelligent design of contracts when information is asymmetric. The model involves the...

We study a strategic market game with finitely many traders, infinite horizon and real assets. To this standard framework (see, e.g. Giraud and Weyers, 2004) we add two key ingredients: First, default is allowed at equilibrium by means of some collateral requirement for financial assets; second,...

An appropriate (interim) notion of the core for an economy with incomplete information depends on the amount of information that coalitions can share. The coarse and fine core, as originally defined by Wilson (1978), correspond to two polar cases, involving no information sharing and arbitrary...

The assumption of asymmetric and incomplete information in a standard New Keynesian model creates strong incentives for monetary policy transparency. We assume that the central bank has better information about its objectives than the private sector, and that the private sector has better...

Rothschild and Stiglitz (1976) show that there need not exist a competitive equilibrium in markets with adverse selection. Building on their framework we demonstrate that externalities between agents - an agent's utility upon accepting a contract depends on the average type attracted by the...

We consider the situation where the owner of some good wants to sell the good to one of several potential buyers. We assume that the owner possesses private information about the buyers' valuations of the good, and analyze this model as an informed principal mechanism design model. In an...

This paper investigates the design of incentives in a dynamic adverse selection framework when agents' production technologies display learning effects and agents' rate of learning is private knowledge. In a simple two-period model with full commitment available to the principal, we show that...

Environmental policy often has to be devised under informational constraints, like uncertainty and asymmetric information. We consider an environmental policy that aims at reducing the welfare losses caused by asymmetric information while being sufficiently simple for implementation. In this...

Multinational enterprises (MNEs) have started to populate also regulated sectors. Their linked international activities and credible threats to relocate are then new concerns for regulators. We study a multiprincipal model in which a privately informed MNE (the agent) produces for two countries...