The basic analytics of moral hazard are developed using the simples t possible model of the insurance market. Even when the underlying expe cted utility function and the function relating the accident probability to accident-prevention effort are extremely well behaved, the indifference curves...

Implicit contract theory has been successful in explaining wage rigidity but not unemployment. We argue that the theory has paid insufficient attention to (i) the general equilibrium aspects and (ii) constraints limiting the set of feasible contracts. Implicit, as opposed to explicit contracts,...