This Element focuses on the efforts of interest groups who try to to influence a policy-maker who in turn exerts effort to increase the probability that a reform be implemented. It analyses linking of the allocative efficiency and redistribution of the aggregate surplus, as both depend on the...

Health insurance premiums often do not reflect individual health risks, implying redistribution from individuals with low health risks to individuals with high health risks. This paper studies whether more cost-sharing leads to less redistribution and to lower welfare of high-risk individuals....

This study investigates how an increase in the quality of business ventures, measured as their success probability, affects trust and return on investment (ROI) in situations where the investor-entrepreneur interaction is affected by moral hazard and asymmetric information. We model a repeated...

This paper analyzes the private production of safe assets and its implications for financial stability. Financial intermediaries (FIs) originate loans, exert hidden effort to improve loan quality, and create safe assets by issuing debt backed by the safe payments from (i) their own loans and...

Moral hazard in health insurance arises when insured individuals are incentivized to over-utilize healthcare services, especially when they face low out-of-pocket costs. While existing literature primarily addresses moral hazard through qualitative studies, this paper introduces a quantitative...