Even where all agents are risk-neutral, merchants can insure themselves against piracy. Such self-insurance is surprisingly invulnerable to moral hazard. Further, there exist a patrolling intensity and/or penalties for captured pirates which, along with mercantile self-insurance, could eliminate...

Even risk-neutral individuals can insure themselves against crimes by combining direct expenditure on security with costly diversification. In such cases — and even when one of these options is infeasible — greater policing often actually encourages private precautions.

Experimental evidence and economic examples like Basu's (1984) taxi-driver problem illustrate that many people are honest (or good) even when beyond the reach of the law, and without repeated interactions or reputation effects. We provide game-theoretic underpinnings of the level of goodness in...