I study an environment with many competing uninformed sellers, one informed buyer, common values and exclusive contracts. I build on the seminal contributions of Rothschild-Stiglitz (1976), Myerson (1983) and Maskin-Tirole (1992) to construct a novel market mechanism, that combines signaling and screening features, and implements interim incentive efficient allocations as equilibria. In the mar...

In economies with adverse selection, Arrow-Debreu contingent commodity contracts must satisfy incentive constraints. Following Prescott and Townsend (in Econometrica, 1984), an Arrow-Debreu economy is considered with a continuum of agents whose feasible sets are artificially restricted by imposing these incentive constraints. Equilibria in such an economy must be incentive-constrained Pareto ef...

We introduce a new type of incentive contract for central bankers: inflation forecast contracts, which make central bankers' remunerations contingent on the precision of their inflation forecasts. We show that such contracts enable central bankers to influence inflation expectations more effectively, thus facilitating more successful stabilization of current inflation. Inflation forecast contra...

We consider insurance markets with adverse selection and propose a mechanism under which a separating Nash equilibrium always exists (even when a Rothschild-Stiglizt equilibrium does not). This equilibrium is unique and always (interim) incentive efficient. In our setting, the Rothschild-Stiglizt equilibrium exists and coincides with ours only if the former is incentive efficient. Otherwise, ou...

This article develops the point that incentive and risk-bearing problems associated with contractual holdup may justify legal intervention. Contractual holdup is considered both for fresh contracts and for modifications of contracts. One type of legal intervention is flat voiding of contracts. Such intervention tends to be advantageous when holdup situations are engineered. Another type of inte...

Agricultural contracts and crop insurance are important ways for farmers to mitigate risks in modern U.S. agriculture. In this paper, we investigate the effect of crop insurance enrollment on farmers’ participation of marketing contracts. Following Ligon (2003), we setup a mechanism design framework to demonstrate an integrator’s contract design problem where farmers are assumed to be expected ...

This paper presents an incentive scheme to control agricultural non-point-source pollution. The analysis is based on a nested agent framework with three parties; farmers, a country’s government, and the governments of all countries that affect each other’s environmental quality. Unlike previous analysis of incentive schemes to control agricultural pollution, we suggest non-individual contracts ...