Disclosure of private medical information allows insurance companies to better predict medical expenditures. The premiums the companies charge the insured employees reflect these expenditures. This paper studies incentives of employees to disclose their medical information. I find that healthier employees prefer to disclose medical information that results in a disclosure plan having a lower pr...

We modify the dynamic pivot mechanism of Bergemann and Välimäki (Econometrica, 2010) in such a way that lump-sum fees are collected from the players. We show that the modified mechanism satisfies ex-ante budget balance as well as ex-post efficiency, periodic ex-post incentive compatibility, and periodic ex-post individual rationality, as long as the Markov chain representing the evolution of pl...

Deposit insurance schemes and bank failure resolution systems are asked to fulfill conflicting public policy objectives: on the one hand, they are supposed to protect small depositors and prevent contagion risks from bank runs; on the other hand, they are supposed to minimize aggressive risk taking by banks. This paper discusses the incentive-compatible design and interaction of both components...

In a model in which agents di↵er in wages and preferences over labor time–consumption bundles, we study labor income tax schemes that alleviate poverty. To avoid conflict with individual well-being, we require redistribution to take place between agents on both sides of the poverty line provided they have the same labor time. This requirement is combined with e ciency and robustness properties....

In McLean and Postlewaite (Econometrica 56, 1992, p. 2421), we analyzed pure exchange economies with asymmetrically informed agents. We defined a notion of informational size and showed that, when the aggregate information of all agents resolves nearly all the uncertainty regarding the state of nature, the conflict between incentive compatibility and (ex post) efficiency can be made small if ag...

A mechanism is pairwise strategy-proof if groups of size one and two never have an incentive to manipulate. When agents have strict preferences over their own outcomes, I show that pairwise strategy-proofness even eliminates incentives for any group of agents to manipulate, therefore implying group strategy-proofness. It is also equivalent to Maskin monotonicity. I obtain the equivalence result...

Informational asymmetries abound in economic decision making and often provide an incentive for deception through telling a lie or misrepresenting information. In this paper I use a cheap-talk sender-receiver experiment to show that telling the truth should be classified as deception too if the sender chooses the true message with the expectation that the receiver will not follow the sender’s (...

In a pioneering approach towards the explanation of the phenomenon of “yes man” behavior in organizations, Prendergast [American Economic Review 83 (1993) 757–770] argued that incentive contracts in employment relationships generally make a worker distort his privately acquired information. This would imply that there is a trade-off between inducing a worker to exert costly effort and inducing ...

This paper deals with the problem of incentive mechanism design in non-convex production economies when production sets and preferences both are unknown to the designer. We consider Nash-implementation of loss-free, average cost, marginal cost, voluntary trading, and quantity-taking pricing equilibrium allocations in economies involving increasing returns to scale or more general types of non-c...

Many experts encourage homeowners to improve their houses to better survive natural catastrophes and reduce overall societal costs. However, we find these encouragements are not necessarily financially sound for the homeowner at risk of hurricane wind damage. We find that subsidized insurance reduces the incentive for a risk-neutral homeowner to purchase structural mitigation, as mitigation doe...