Participants in student loan programs must repay loans in full regardless of whether they complete college. But many students who take out a loan do not earn a degree (the dropout rate among college students is between 33 to 50 percent). We examine whether insurance against college-failure risk can be offered, taking into account moral hazard and adverse selection. To do so, we develop a model ...

In his world-famous paper of 1948, Shannon defined channel capacity as the ultimate rate at which information can be transmitted over a communication channel with an error probability that will vanish if we allow the blocklength to get infinitely large. While this result is of tremendous theoretical importance, the reality of practical systems looks quite different: no communication system will...