We build an overlapping generations model in which reproductive households face a child quantity/child quality trade-off and bureaucrats are delegated with the task of delivering public services that support the accumulation of human capital. By integrating the theoretical analyses of endogenous...

We model an economy where imperfectly competitive firms choose whether to employ a dirty technology and pay an emission tax or employ a clean technology and incur the cost of its adoption. Bureaucrats who are entrusted with the task of monitoring the emissions of each firm, are corruptible in...

I model an economy where the adverse health effects of pollution impede labour productivity and capital accumulation is the source of economic growth. Pollution is generated by firms that choose whether to employ a dirty technology and pay an environmental tax, or employ a clean technology and...

Evidence shows that (i) people overweight low probabilities and underweight high probabilities, but (ii) ignore events of extremely low probability and treat extremely high probability events as certain. The main alternative decision theories, rank dependent utility (RDU) and cumulative prospect...

We focus on four stylized facts of behavior under risk. Decision makers: (1) Overweight low probabilities and underweight high probabilities. (2) Ignore events of extremely low probability and treat extremely high probability events as certain. (3) Buy inadequate insurance for very low...

This paper develops a hierarchical principal-agent model to explore the influence of corruption, bribery, and politically provided oversight of production on the efficiency and level of output of some publicly provided good. Under full information, an honest politician acheives the first best...

Since Kahneman and Tversky (1979), it has been generally recognized that decision makers overweight low probabilities and underweight high probabilities. Of the several weighting functions that have been proposed, that of Prelec (1998) has the attractions that it is parsimonious, consistent with...

Evidence shows that (i) people overweight low probabilities and underweight high probabilities, but (ii) ignore events of extremely low probability and treat extremely high probability events as certain. Decision models, such as rank dependent utility (RDU) and cumulative prospect theory (CP),...