This paper extends the standard model of optimum commodity taxation (Ramsey (1927)and Diamond-Mirrlees (1971)) to a competitive economy in which markets are inefficient due to asymmetric information. Insurance markets are prime examples: consumers impose varying costs on suppliers but firms...

Regular annuities provide payment for the duration of an owner's life-time. Period-Certain annuities provide additional payment after death to adesignated beneficiary provided the insured dies within a certain period after annuitization. It has been argued that the bequest option offered by the...

This paper presents a model in which government may affect outcomes by manipulating individual choice probabilities through the design of the domain of choice or the use of fiscal instruments. Such manipulations are ineffective when individuals are perfectly rational, provided all alternatives...

With varying aptitudes in different occupations,individuals typically maximize income by specializing in one occupation which promises the highest income. Due to numerous labor market imperfections anduncertainties, the choice of best occupation is accomplished with only partial success. We...

When individuals choose from whatever alternatives available to them the one that maximizes their utility then it is always desirable that the government provide them with as many alternatives as possible. Individuals, however, do not always choose what is best for them and their mistakes may be...

This paper considers how insurance companies choose a price schedule for policies depending on the size of these policies which are determined by households. Under asymmetric information, we analyse the tension between self-selection and the density distribution of household by accident...

We argue that paygo rates are determined by a representative agent and a benevolent government jointly maximizing the expected life-time utility of the agent. The distributions of labor and capital income are calculated from national data on real GDP, real wages and the real return to capital...

The menu-cost model (Sheshinski-Weiss, 1977) demonstrated that in the presence of fixed price adjustment costs, monopoly firms who face an inflationary trend in rival prices will adjust their nominal price level periodically, following an (S,s) policy in real price space. This paper tests the...

This paper examines the direct and indirect e�ects of a government's wage policy in the public sector on the overall income distribution in the economy. By direct e�ects we mean the wage di�erentials in the public sector. Indirect e�ects refer to the secondary e�ects of the...