This paper investigates the crowding-out effect of formal insurance on informal risk-sharing arrangements via theory and laboratory experiment. Our model and simulation predict that the crowding out of private transfers is often more than one-for-one and will reduce the total risk coverage....

This paper uses a mechanism design without transfer approach to investigate the optimal communication mechanism in a two-division organization. The principal, with perfect commitment power on multiple decision rules, wants decisions to be both adapted to local conditions and coordinated with...