Information security controls can help reduce the probability of a breach, but cannot guarantee that one will not occur. In order to reduce the costs of data breaches, firms are faced with competing alternatives. Investments in ex ante security measures can help prevent a breach, but this is costly and may be inefficient; ex post mitigation efforts can help reduce losses following a breach, but...

In a model with both issues of sovereign debtor moral hazard and creditor coordination under incomplete information, we show that the resulting con‡ict between ex ante and interim e¢ ciency limits the welfare impact of strengthening CACs. Conditional on default, we show that an interim e¢ cient CAC threshold exists and improving creditor coordination results in welfare gains. However, when ex a...

Th is research examines the ex-ante optimal U.S. Social Security benefi t structure using the model developed in Nishiyama and Smetters (2007). Whereas NS2007 analyzed the effi ciency of diff erent, specifi c alternative designs of the U.S. Social Security system, the current paper attempts to derive the ex-ante best system design among a larger range of diff erent potential Social Security fo...

In some, but not all, contexts, respondents to stated preference valuation studies state a willingness to pay (WTP) higher than what lab or field experiments indicate is the actual amount they would pay. However, several ex ante survey design strategies and ex post calibration techniques can be used to minimize or eliminate hypothetical bias. This article reviews and presents evidence on the ef...

We look at a principal–agent model in which the agent has to perform an action, the difficulty of which is better known ex interim than ex ante. We compare two contracting regimes; one with commitment to an ex ante negotiated contract, and one with an ex interim negotiated contract. The ex ante contract can not be too steep, but attempts to negotiate a steeper ex interim contract may result in ...

In a partition model, we show that each maximin individually rational and ex-ante maximin efficient allocation of a single good economy is implementable as a maximin equilibrium. When there are more than one good, we introduce three conditions. If none of the three conditions is satisfied, then a maximin individually rational and ex-ante maximin efficient allocation may not be implementable. Ho...

We study a model of imperfectly discriminating contests with two ex ante symmetric agents. We consider four institutional settings: Contestants move either sequentially or simultaneously and in addition their types are either public or private information. We find that an effort-maximizing designer of the contest prefers the sequential to the simultaneous setting from an ex ante perspective. Mo...

In the property rights theory of the firm, control over assets (ownership) affords bargaining power in the case of re-negotiation, providing incentives for parties to make relationship specific investments. The models predict that property rights will be allocated so as to maximise surplus generated from investment. However, these models assume that investments are made simultaneously. In this ...

Estimates of willingness to pay in adversely selected markets tend to understate the ex-ante (or utilitarian) willingness to pay for insurance. This paper derives an ’ex-ante’ willingness to pay curve that measures welfare from behind the veil of ignorance. I provide a strategy to estimate this curve using market choices and costs, combined with a measure of risk aversion. In examples motivated...

This paper revisits the problem of estimating ex ante cost functions previously studied by Pope and Just (1996) and Moschini (2001). An ex ante cost function that generalizes their ex ante cost functions is introduced, and an econometric procedure for estimating a flexible approximation to it is developed. That generalized cost function is economically relevant not only for the Just and Pope (1...