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Author : Roger Guesnerie
Publisher :
ISBN 13 :
Total Pages : 22 pages
Book Rating : 4.:/5 (53 download)
Download or read book Adverse Selection and Moral Hazard with Risk-neutral Agent written by Roger Guesnerie and published by . This book was released on 1986 with total page 22 pages. Available in PDF, EPUB and Kindle. Book excerpt:
Author :
Publisher :
ISBN 13 :
Total Pages : 22 pages
Book Rating : 4.:/5 (933 download)
Download or read book Adverse Selection and Moral Hazard with Risk-neutral Agent written by and published by . This book was released on 1980 with total page 22 pages. Available in PDF, EPUB and Kindle. Book excerpt:
Author : Nicole Petrick
Publisher : GRIN Verlag
ISBN 13 : 3640089480
Total Pages : 19 pages
Book Rating : 4.6/5 (4 download)
Download or read book Adverse Selection and Moral Hazard in Contract Law written by Nicole Petrick and published by GRIN Verlag. This book was released on 2007-05-10 with total page 19 pages. Available in PDF, EPUB and Kindle. Book excerpt: Essay aus dem Jahr 2005 im Fachbereich BWL - Recht, Note: 1,7, Higher School of Economics Moscow, Russia, Sprache: Deutsch, Abstract: Legal and economical interpretations of contract, contract law and contract theory, asymmetric information, adverse selection and moral hazard. Paper explains negative effects of adverse selection and moral hazard for the case of transaction costs and incomplete contracts and describes incentives to avoid adverse selection and moral hazard, such as signaling and deductibles as well as indemnity contracts and valued contracts.
Author : Daniel Gottlieb
Publisher :
ISBN 13 :
Total Pages : 0 pages
Book Rating : 4.:/5 (137 download)
Download or read book Simple Contracts with Adverse Selection and Moral Hazard written by Daniel Gottlieb and published by . This book was released on 2015 with total page 0 pages. Available in PDF, EPUB and Kindle. Book excerpt: We study a principal-agent model with both moral hazard and adverse selection. Risk-neutral agents with limited liability have arbitrary private information about the distribution of outputs and the cost of effort. We obtain conditions under which the optimal mechanism offers a single contract to all types. These conditions are always satisfied, for example, if output is binary or if the distribution of outputs is multiplicatively separable and ordered by FOSD (if it is not ordered, the optimal mechanism offers at most two contracts). If, in addition, the marginal distribution satisfies the monotone likelihood ratio property, this single contract is a debt contract. Our model suggests that offering a single contract may be optimal in environments with adverse selection and moral hazard, where offering flexible menus of contracts provides gaming opportunities to the agent.
Author : Bruno Jullien
Publisher :
ISBN 13 :
Total Pages : 48 pages
Book Rating : 4.X/5 (6 download)
Download or read book Screening Risk Averse Agents Under Moral Hazard written by Bruno Jullien and published by . This book was released on 2001 with total page 48 pages. Available in PDF, EPUB and Kindle. Book excerpt:
Author : Felipe Balmaceda
Publisher :
ISBN 13 :
Total Pages : 41 pages
Book Rating : 4.:/5 (13 download)
Download or read book Contracting with Moral Hazard, Adverse Selection and Risk Neutrality written by Felipe Balmaceda and published by . This book was released on 2018 with total page 41 pages. Available in PDF, EPUB and Kindle. Book excerpt: This paper studies a principal-agent model in which the principal and agent are risk-neutral, there are two actions, adverse selection, moral hazard and limited liability. When the two actions are subject to moral hazard, there is no distortion at the top, the optimal action profile is downward distorted for everyone else and the optimal menu of contract exhibits the one-size-fits-all property; that is, each ability type receives the same contract. The optimal contract pays a bonus when the outcome with the highest likelihood ratio is observed and the limited liability otherwise. When one of the actions is contractible and the other is subject to moral hazard, there is no distortion at the top, the non-contractible action is downward distorted for everyone else, the contractible action can be either upward or downward distorted. The optimal contract no longer exhibits the one-size-fits-all property. The one-size-fits-all property sheds light why we rarely observe menus of contracts in market that use franchising, credit and labor markets, and in regulated industries.
Download or read book Optimal Contracts Under Adverse Selection and Moral Hazard written by and published by . This book was released on 2010 with total page pages. Available in PDF, EPUB and Kindle. Book excerpt: This article presents a continuous-time agency model in the presence of adverse selection and moral hazard with a risk-averse agent and a risk-neutral principal. Under the model setup, we show that the optimal controls are constant over time, and thus the optimal menu consists of contracts that are linear in the final outcome. We also show that when a moral hazard problem adds to an adverse selection problem, the monotonicity condition well known in the pure adverse selection literature needs to be modified to ensure the incentive compatibility for information revelation. The model is applied to a few managerial compensation problems involving managerial project selection and capital budgeting decisions. We argue that in the third-best world, the relationship between the volatility of the outcome and the sensitivity of the contract depends on interactions between the managerial cost and the firm`s production functions. Contrary to conventional wisdom, sometimes the higher the volatility, the higher the sensitivity of the contract. The firm receiving good news sometimes chooses safer projects or invests less than it does with bad news. We also examine the effects of the observability of the volatility on corporate investment decisions.
Author : Jaeyoung Sung
Publisher :
ISBN 13 :
Total Pages : 51 pages
Book Rating : 4.:/5 (129 download)
Download or read book Optimal Contracts Under Moral Hazard and Adverse Selection written by Jaeyoung Sung and published by . This book was released on 2008 with total page 51 pages. Available in PDF, EPUB and Kindle. Book excerpt: In spite of the importance of optimal contracting problems under moral hazard and adverse selection, current literature offers no optimal solutions to contracting problems under moral hazard and adverse selection with risk averse agents. The agent's risk aversion, however, appears to be critical for understanding managerial compensation problems. We present a continuous-time agency model with a risk-averse agent and a risk-neutral principal to show that moral hazard and adverse selection can be optimally resolved with a menu of linear contracts. In application, we discuss a few managerial compensation problems involving managerial project selection and capital budgeting decisions, and show that a flat-wage contract is sometimes optimal.
Author : Bernd Theilen
Publisher :
ISBN 13 :
Total Pages : 30 pages
Book Rating : 4.:/5 (434 download)
Download or read book Simultaneous Moral Hazard and Adverse Selection with Risk Averse Agents written by Bernd Theilen and published by . This book was released on 2000 with total page 30 pages. Available in PDF, EPUB and Kindle. Book excerpt:
Author : Natalie Packham
Publisher :
ISBN 13 :
Total Pages : 7 pages
Book Rating : 4.:/5 (13 download)
Download or read book Optimal Contracts Under Adverse Selection, Moral Hazard and Type-Dependent Reservation Utilities written by Natalie Packham and published by . This book was released on 2015 with total page 7 pages. Available in PDF, EPUB and Kindle. Book excerpt: In a continuous-time setting where a risk-averse agent controls the drift of an output process driven by a Brownian motion, optimal contracts are linear in the terminal output; this result is well-known in a setting with moral hazard and - under stronger assumptions - adverse selection. Using techniques from stochastic control theory, we show that this result continues to hold when in addition reservation utilities are type-dependent. This type of problem occurs in the study of optimal compensation problems involving competing principals.
Author : Alex Gershkov
Publisher :
ISBN 13 :
Total Pages : pages
Book Rating : 4.:/5 (838 download)
Download or read book Dynamic Contracts with Moral Hazard and Adverse Selection written by Alex Gershkov and published by . This book was released on 2011 with total page pages. Available in PDF, EPUB and Kindle. Book excerpt:
Author : Rajiv D. Banker
Publisher :
ISBN 13 :
Total Pages : 58 pages
Book Rating : 4.:/5 (13 download)
Download or read book Screening Versus Sorting in a Principal-Agent Model with Moral Hazard and Adverse Selection written by Rajiv D. Banker and published by . This book was released on 2014 with total page 58 pages. Available in PDF, EPUB and Kindle. Book excerpt: This paper proposes a principal-agent model of moral hazard and adverse selection that introduces the notion of screening, which is distinct from sorting; and distinguishes between ability that is privately known by the agent versus general ability that is observable by the principal and market. Sorting is the traditional process by which the adverse selection problem is resolved. Screening is the process we propose by which agents that are deemed to be unsuitable are rejected. Used in conjunction with sorting, we consider ex-ante screening on the basis of the measure of general ability; and ex-post screening on the basis of the private measure of ability. We find that the principal may favor an agent with high or low general ability, but always prefers an agent with superior private ability. We derive the properties of the ex-ante and ex-post screening rules as they relate to the characteristics of the principal-agent relationship. Surprisingly, a positive relationship between the private and general measures of ability tends to imply that general ability has a negative effect on the incentives and compensation of the agent, as well as the expected outcome and profit of the firm. Finally, we discuss the econometric methods by which empirical studies of executive compensation should be adjusted to take into account the fact that CEOs were selected for their positions.
Author : Shirō Hagihara
Publisher :
ISBN 13 :
Total Pages : 30 pages
Book Rating : 4.:/5 (145 download)
Download or read book Moral Hazard Followed by Adverse Selection with Multiple Agents written by Shirō Hagihara and published by . This book was released on 2007 with total page 30 pages. Available in PDF, EPUB and Kindle. Book excerpt:
Author : Perrin Lefebvre
Publisher : Cambridge University Press
ISBN 13 : 1009285599
Total Pages : 104 pages
Book Rating : 4.0/5 (92 download)
Download or read book Reform for Sale written by Perrin Lefebvre and published by Cambridge University Press. This book was released on 2023-01-31 with total page 104 pages. Available in PDF, EPUB and Kindle. Book excerpt: Lobbying competition is viewed as a delegated common agency game under moral hazard. Several interest groups try to influence a policy-maker who exerts effort to increase the probability that a reform be implemented. With no restriction on the space of contribution schedules, all equilibria perfectly reflect the principals' preferences over alternatives. As a result, lobbying competition reaches efficiency. Unfortunately, such equilibria require that the policy-maker pays an interest group when the latter is hurt by the reform. When payments remain non-negative, inducing effort requires leaving a moral hazard rent to the decision maker. Contributions schedules no longer reflect the principals' preferences, and the unique equilibrium is inefficient. Free-riding across congruent groups arises and the set of groups active at equilibrium is endogenously derived. Allocative efficiency and redistribution of the aggregate surplus is linked altogether and both depend on the set of active principals, as well as on the group size.
Author : Jaewoo Ryoo
Publisher :
ISBN 13 :
Total Pages : 44 pages
Book Rating : 4.:/5 (318 download)
Download or read book Adverse Selection, Reputation, and Firms in Professional Service Markets written by Jaewoo Ryoo and published by . This book was released on 1992 with total page 44 pages. Available in PDF, EPUB and Kindle. Book excerpt:
Author : Bernard Salanie
Publisher : MIT Press
ISBN 13 : 0262534223
Total Pages : 257 pages
Book Rating : 4.2/5 (625 download)
Download or read book The Economics of Contracts, second edition written by Bernard Salanie and published by MIT Press. This book was released on 2017-02-17 with total page 257 pages. Available in PDF, EPUB and Kindle. Book excerpt: A concise introduction to the theory of contracts, emphasizing basic tools that allow the reader to understand the main theoretical models; revised and updated throughout for this edition. The theory of contracts grew out of the failure of the general equilibrium model to account for the strategic interactions among agents that arise from informational asymmetries. This popular text, revised and updated throughout for the second edition, serves as a concise and rigorous introduction to the theory of contracts for graduate students and professional economists. The book presents the main models of the theory of contracts, particularly the basic models of adverse selection, signaling, and moral hazard. It emphasizes the methods used to analyze the models, but also includes brief introductions to many of the applications in different fields of economics. The goal is to give readers the tools to understand the basic models and create their own. For the second edition, major changes have been made to chapter 3, on examples and extensions for the adverse selection model, which now includes more thorough discussions of multiprincipals, collusion, and multidimensional adverse selection, and to chapter 5, on moral hazard, with the limited liability model, career concerns, and common agency added to its topics. Two chapters have been completely rewritten: chapter 7, on the theory of incomplete contracts, and chapter 8, on the empirical literature in the theory of contracts. An appendix presents concepts of noncooperative game theory to supplement chapters 4 and 6. Exercises follow chapters 2 through 5. Praise for the previous edition: “The Economics of Contracts offers an excellent introduction to agency models. Written by one of the leading young researchers in contact theory, it is rigorous, clear, concise, and up-to-date. Researchers and students who want to learn about the economics of incentives will want to read this primer.”—Jean Tirole, Institut D'Économie Industrielle, Universite des Sciences Sociales, France “Students will find this a very useful introduction to the ideas of contract theory. Salanié has managed to summarize a large amount of material in a relatively short number of pages in a highly accessible and readable manner.”—Oliver Hart, Professor of Economics, Harvard University
Author : Sonku Kim
Publisher :
ISBN 13 :
Total Pages : 44 pages
Book Rating : 4.:/5 (318 download)
Download or read book Linear Contracts and the Double Moral-hazard written by Sonku Kim and published by . This book was released on 1996 with total page 44 pages. Available in PDF, EPUB and Kindle. Book excerpt:
