Working Paper 385

Organizations in Economic Analysis.

Edward C. Prescott | Senior Monetary Advisor
Bruce D. Smith
John H. Boyd

Revised February 1, 1988

Three economic environments are reviewed, and in each organizations play an essential role. For an adverse selection insurance economy, we find that when mutual insurance arrangements are permitted an equilibrium necessarily exists and is optimal. This example, and the two others, illustrate the problems that may result from imposing organizational structure on an environment rather than permitting the structure to be determined endogenously.

Published In: Canadian Journal of Economics (Vol 21, Num 3, August 1988, pp. 477-491)

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