Health insurers increasingly compete on their networks of medical providers. Using data from Massachusetts’s insurance exchange, I find substantial adverse selection against plans covering the most prestigious and expensive “star” hospitals. highlight a theoretically distinct channel: consumers loyal to star hospitals incur high spending, conditional state, because they use these hospitals’ car...

A central issue in designing incentive contracts is the decision to reward agents’ input use versus outputs. The trade-off between risk and return innovation production can also lead agents with varying skill levels perform differentially under different contracts. We study this experimentally, observing verifying inputs outputs Indian maternity care. find that both contract types achieve compa...

We study the ex ante incentive compatible core, and provide conditions under which the ex ante incentive compatible core is nonempty when agents are informationally small in the sense of McLean and Postlewaite (2002a, Econometrica, 70, 2421–2453).  2003 Elsevier Inc. All rights reserved. JEL classification: C71; D51; D82

This paper investigates communication between an informed expert and an uninformed principal via a strategic mediator. We demonstrate that, for any bias in the parties’preferences, there exists a strategic mediator that provides the highest expected payo¤ to the principal, as if the players had communicated through an optimal non-strategic mediator. JEL classi…cation: C72, D82, D83

This paper further studies a model of information elicitation due to Smorodinsky and Tennenholtz [13], where the introduction of sequential mechanisms results in more efficiency than the classical simultaneous mechanism design approach entails. Whereas the original work focused on anonymous function and settings where information is distributed independently across agents we extend the results ...

This paper models employment relationship as a repeated principal-agent problem with private evaluation. The efficient contracts exhibit correlated movements between lagged wage and current effort that are consistent with the positive feedback between pay and morale in practice. Low morale therefore is an integral part of a well-functioning relationship. (JEL: C73, D82, J41, L14 )

Consider a mechanism design setting in which agents acquire costly information about an unknown, payoff-relevant state of nature. Information gathering is covert and the agents’ information is correlated. We investigate conditions under which (i) efficiency and (ii) full surplus extraction are Bayesian incentive compatible and interim individually rational. JEL Classification: D44, D82

We consider Kyle’s market order model of insider trading with multiple informed traders and show: if a linear equilibrium exists for two different numbers of informed traders, asset payoff and noise trading are independent and have finite second moments, then these random variables are normally distributed. Journal of Economic Literature Classification Numbers: C62, D82, G14.

We show the existence of a pure strategy, symmetric, increasing equilibrium in double auction markets with correlated private valuations and many participants. The equilibrium we find is arbitrarily close to fully revealing as the market size grows. Our results provide strategic foundations for price-taking behavior in large markets. JEL Classification: C62, C72, D44, D82

Partially specified probabilities induce coherent risk measures of a special kind. These measures are axiomatized using the four axioms that characterize coherent risk measures and an additional one, which requires that the risk measure be additive on the set of efficient portfolios. Journal of Economic Literature classification numbers: C61, C72, D81, D82, D83