We investigate channels of federally provided income insurance for U.S. States, finding that a major part of federal insurance is provided through transfers. We compare the "bang for the buck" of various fiscal institutions, finding that unemployment benefits are dramatically more efficient in...

A partly heuristic attempt at exploring long-run policies aimed at a second-best compromis between ex ante risk-sharing efficiency and ex post productive efficiency. Wage subsidies for low-skilled workers financed vy taxes on high wages are advocated, together with imposed risk sharing between...

In this paper, we show how a differentiated tax treatment of corporate losses and corporate profits induces the firm to behave in a very specific risk-averse manner.

This paper analyzes the political support for a public insurance in the presence of a private insurance alternative. The public insurance is co mpulsory and offers a uniform insurance policy. The private insurance is voluntary and can offer different insurance policies to different individual...

Risk aversion and limited liability can result in a rational to gambling. An addictive episode may be triggered by a loss and it may be terminated by a win. The gambler rationality chases a target level of wealth, while being drawn ever more strongly into a gambler's ruin.