Such problems of moral hazard have been discussed by Jacques Drèze in his dissertation, leading to the 1961 paper (8), whose analysis was generalized in 1987 (76), and simplified in 2004 (123).
With reference to state-dependent preferences and moral hazard, a natural application of long-standing interest to economists concerns the provision of safety, for instance through road investments that are aimed at saving lives.
In 1975 Drèze contributed "the first general equilibrium analysis of quantity rationing necessitated by prices failing to adjust to equate supply and demand", which "have introduced significant elements of realism to the basic model, .
Of particular significance to future developments is a joint paper with Pierre Dehez (55), which establishes the existence of Drèze equilibria with no rationing of the demand side.
In the meantime, Jean-Pascal Bénassy (1975) and Yves Younès (1975) had approached the same problem from a macroeconomic angle, for the more restrictive case of fixed prices.
There developed a lively interest in fixed price economies, and specifically in a three-good macroeconomic model, first formulated by Robert Barro and Herschel Grossman (1971) and then studied extensively by Edmond Malinvaud (1977).
The new statistical challenges posed by "disequilibrium econometrics" were attacked at CORE by two students of Jacques Drèze, namely Henri Sneessens (1981) and Jean-Paul Lambert (1988).
[7] The next steps in the theoretical research came with the work of John Roberts on supply-constrained equilibria at competitive prices, and then with the dissertation of Jean-Jacques Herings at Tilburg (1987, 1996).
Next, in a joint paper with Herings and others (132), Drèze established the generic existence of a continuum of Pareto-ranked supply-constrained equilibria for a standard economy with some fixed prices.
Starting with a paper in Econometrica by Dierker, Guesnerie and Neuefeind (1985), a theory of general equilibrium has developed for economies with non-convex production sets, where firms follow well-defined pricing rules.
Those interested primarily in applications might express skepticism, perhaps even horrified skepticism, upon realizing that 90 pages of a serious economics journal—a 1988 issue of The Journal of Mathematical Economics---were devoted to existence proofs of equilibrium in non-convex economies, under alternative formulations of the assumption that marginal cost pricing entails bounded losses at normalized prices.
The innovative idea here is the transposition of the reasoning underlying the theory of "implicit labour contracts" to the understanding of wage rigidities and unemployment benefits.
Of particular significance to future developments is a joint paper with Pierre Dehez (55), which establishes the existence of Drèze equilibria with no rationing of the demand side.
In the meantime, Jean-Pascal Bénassy (1975) and Yves Younès (1975) had approached the same problem from a macroeconomic angle, for the more restrictive case of fixed prices.
There developed a lively interest in fixed price economies, and specifically in a three-good macroeconomic model, first formulated by Robert Barro and Herschel Grossman (1971) and then studied extensively by Edmond Malinvaud (1977).
The new statistical challenges posed by "disequilibrium econometrics" were attacked at CORE by two students of Jacques Drèze, namely Henri Sneessens (1981) and Jean-Paul Lambert (1988).
The next steps in the theoretical research came with the work of John Roberts on supply-constrained equilibria at competitive prices, and then with the dissertation of Jean-Jacques Herings at Tilburg (1987, 1996).
Next, in a joint paper with Herings and others (132), the generic existence of a continuum of Pareto-ranked supply-constrained equilibria was established for a standard economy with some fixed prices.
Two young French economists, Jean-Pascal Bénassy (1975) and Yves Younès (1975), approached the same problem from a macroeconomic angle, for the more restrictive case of fixed prices.
There developed a lively interest in fixed-price economies, and specifically in a three-good macroeconomic model, first formulated by Robert Barro and Herschel Grossman (1971) and then studied extensively by Edmond Malinvaud (1977).
The new statistical challenges posed by "disequilibrium econometrics" were attacked at CORE by two students of Jacques Drèze, namely Henri Sneessens (1981) and Jean-Paul Lambert (1988), whose dissertations were published and widely read.
With Edmond Malinvaud, Drèze organized a group of thirteen Belgian and French economists who wrote "Growth and employment: the scope for a European initiative" (103, 104): This position paper advocated an ambitious program of public investments coupled with the elimination of social security contributions by employees on minimum wages.
That paper has influenced the programs of reduced contributions on low wages introduced recently in several countries, especially France and Belgium.
The methodological spectrum includes at one end practical and institutional aspects of public utility pricing, taxation or health care provision, which give the field its substantive content.
The research output at CORE since 1966 consists to date of some 110 books, 125 doctoral dissertations, and 1700 published articles; Discussion Papers now average 85 per year.
Today the EEA sponsors the Journal of the European Economic Association (JEEA), holds annual meetings, and organizes summer schools for young researchers.
Born in Verviers (Belgium) in 1929, Jacques Drèze did undergraduate economics at the nearby Université de Liège, and then a PhD at Columbia University, with a thesis on "Individual Decision Making under Partially Controllable Uncertainty" supervised by William Vickrey.
His son Jean wrote that he planned a magnus opus tentatively titled Uncertainty and Economic Policies: General Equilibrium, Incomplete Markets and Macroeconomics, but never completed it.