JSTOR is a not-for-profit service that helps scholars, researchers, and students discover, use, and build upon a wide range of content in a trusted digital archive. We use information technology and tools to increase productivity and facilitate new forms of scholarship. For more information about JSTOR, please contact support@jstor.org.Welfare-increasing reputation effects arise in credit markets when adverse selection gives rise to borrower reputation formation incentives that mitigate moral hazard problems. This paper shows that welfare stemming from reputation effects will diminish over time as the private information of borrowers is revealed to lenders in the form of lengthening credit histories. Aggregate borrower welfare may therefore decrease over time unless reputation effects can be sustained. Restricting a lender's access to a borrower's credit history via credit bureau policy is shown to be one method of sustaining reputation effects and preventing a decline in welfare.

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This paper uses the information implicit in commodity futures and options prices to infer market beliefs about the impact of early‐stages COVID‐19 on commodity market fundamentals. The particular commodity examined is soft red winter (SRW) wheat, and the timeframe is early February to late March 2020. The analysis highlights various adjustments in the cash and futures price of SRW wheat in light of surging short‐run demand from consumer hoarding of staple food products, and a weakening long‐run market from growing wheat stocks and an emerging global recession. This split is causing the forward curve to flatten and basis levels to invert. The change over time in the price of options on wheat futures reveals increased price volatility in response to growing uncertainty about the COVID‐19 impacts. Similarly, changes in the skewness of the option's volatility smile illustrate a shift in traders’ perception about risk in the right versus left tail of the price distribution.

Given full information, Pareto optimal crop insurance contracts are actuarially fair, provide full coverage, differ for each individual, and would normally be provided by a competitive market (Ahsan, Ali and Kurian; Nelson and Loehman; Chambers). With imperfect information in the form of adverse selection and moral hazard, competitive insurance markets typically do not exist (unless subsidized) or provide less than full coverage (Rothschild and Stiglitz). Nelson and Loehman argue that public subsidies are a possible "second-best" solution to this problem, but superior alternatives likely exist. In particular, contracts that are "informational efficient" (Spence and Zeckhauser), allow for "self selection" (Rothschild and Stiglitz), "repeat" (Rubinstein and Yaari), or involve "forcing contracts" (Harris and Raviv) are second-best alternatives and possibly are more efficient than public subsidies. Nelson and Loehman go on to suggest that individualcoverage crop insurance contracts have some of these features and are thus a step in the right direction.Individual-coverage crop insurance enjoys This paper examines the moral hazard implications of individual-coverage crop insurance contracts. Individual-coverage contracts are information ally superior to standard contracts because the farmer's coverage is proportional to his average historical yield. Despite this apparent benefit, the steady-state solution is shown to be characterized by moral hazard cycles, where moral hazard is practiced in alternative periods. The amplitude of the cycle and, thus, the variability in planned production is shown to be larger the lower the degree of production uncertainty, the fewer the number of years used in the averaging process, the higher the coverage threshold, and the lower the level of co-insurance.