This paper develops a methodology for estimating structural time-allocation models for self-employed households and applies it to peasant family labor supply behavior in the Peruvian Sierra. The oppurtunity costs of time, or shadow wages, of household workers are explicitly estimated from an agricultural production function. Using an instrumental variables procedure, the household's structural labor supply parameters are recovered from variation in these shadow wages. The empirical results are robust to a number of alternative specifications and diagnostic tests and lend support to the rational allocation of time by peasant households.

Double moral hazard in continuous time generates the familiar warranty pattern with full coverage for an initial block of time. The more complete the warranty, the better the producer's durability incentives and the worse the consumer's maintenance incentives. Using continuous time highlights the need for some warranty bound to avoid reaching the first-best as an unreasonable limit. Early in the paper, an exogenous bound is used, while later the bound arises endogenously from the possibility of abuse and repair. A quadratic example shows that the warranty's duration depends on the relative severity of the two moral hazard problems.