Exclusions are part of any property insurance. A prototypically simple contract covers losses from a single peril but excludes losses from all other perils and, typically, from the insured peril in some instances. Demand for insurance is impacted by exlcuded risks. There are two tendencies here:...

This paper addresses coalition government formation. We formulate a model that dresses why and when coalition governments from that include more than the minimum number of parties required for the majority.

In nonconvex environments, a sunspot equilibrium can sometimes be destroyed by the introduction of new extrinsic information. We provide a simple test for determining whether or not a particular equilibrium survives, or is robust to all, all possible refinements fo the state space.

This paper studies optimal property insurance in the presence of equity risk and conversion risk. Equity risk is randomness of the value of a property. It tends to raise demand for conventional insurance on the property effectively increasing the risk aversion of the property owner. In contrast,...

The paper specifies bargaining contracts involving lotteries for the purpose of traiding an indivisible good.

We use an information-theoretic approach to describe changes in lending relationships between federal funds market participants around the time of the Lehman Brothers failure. Unlike previous work that conducts maximum-likelihood estimation on undirected networks, our analysis distinguishes...

Systemic risk among the network of international banking groups arises when financial stress threatens to crisscross many national boundaries and expose imperfect international coordination. To assess this risk, we consider three decades of data on the cross-border interbank market. We use...

We study the impact of the recent global financial crisis on CHAPS, the United Kingdom’s large-value payments system. Core infrastructures functioned smoothly throughout the crisis and settlement banks continued to meet their payment obligations. However, payments data show that in the two...