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Author : Benjamin Edward Hermalin
Publisher :
ISBN 13 :
Total Pages : 31 pages
Book Rating : 4.:/5 (35 download)
Download or read book Moral Hazard and Verifiability written by Benjamin Edward Hermalin and published by . This book was released on 1990 with total page 31 pages. Available in PDF, EPUB and Kindle. Book excerpt:
Author : Benjamin E. HERMALIN
Publisher :
ISBN 13 :
Total Pages : pages
Book Rating : 4.:/5 (119 download)
Download or read book MORAL HAZARD AND VERIFIABILITY: THE EFFECTS OF RENEGOTIATION IN AGENCY written by Benjamin E. HERMALIN and published by . This book was released on 1990 with total page pages. Available in PDF, EPUB and Kindle. Book excerpt:
Author : Benjamin Edward Hermalin
Publisher :
ISBN 13 :
Total Pages : 37 pages
Book Rating : 4.:/5 (35 download)
Download or read book Moral Hazard and verifiability written by Benjamin Edward Hermalin and published by . This book was released on 1989 with total page 37 pages. Available in PDF, EPUB and Kindle. Book excerpt:
Author : Murat Usman
Publisher :
ISBN 13 :
Total Pages : 0 pages
Book Rating : 4.:/5 (137 download)
Download or read book Verifiability and Contract Enforcement written by Murat Usman and published by . This book was released on 2002 with total page 0 pages. Available in PDF, EPUB and Kindle. Book excerpt: We model the litigation of a contract containing a variable not observable by courts, hence non verifiable, unless the rational and self-interested judge exerts effort. He values the correct ruling but dislikes effort. Judicial effort is discretionary. We show that effort cost is inconsequential, - "always breach" is equilibrium for any effort cost. But there exists another equilibrium where a small breach rate is achieved even with significant effort costs. Maximal remedies for breach are not optimal. Because effort is discretionary, low effort cost increases breach. Pre-trial negotiations can have a substantial negative impact on verifiability under arbitrarily small deviations from full rationality.
Author : Anja Schöttner
Publisher :
ISBN 13 :
Total Pages : 190 pages
Book Rating : 4.:/5 (181 download)
Download or read book Essays on Incentive Contracts Under Moral Hazard and Non-verifiable Performance written by Anja Schöttner and published by . This book was released on 2005 with total page 190 pages. Available in PDF, EPUB and Kindle. Book excerpt:
Author : Juan Flores Zendejas
Publisher : Routledge
ISBN 13 : 1000515028
Total Pages : 167 pages
Book Rating : 4.0/5 (5 download)
Download or read book Moral Hazard written by Juan Flores Zendejas and published by Routledge. This book was released on 2021-12-30 with total page 167 pages. Available in PDF, EPUB and Kindle. Book excerpt: Moral Hazard is a core concept in economics. In a nutshell, moral hazard reflects the reduced incentive to protect against risk where an entity is (or believes it will be) protected from its consequences, whether through an insurance arrangement or an implicit or explicit guarantee system. It is fundamentally driven by information asymmetry, arises in all sectors of the economy, including banking, medical insurance, financial insurance, and governmental support, undermines the stability of our economic systems and has burdened taxpayers in all developed countries, resulting in significant costs to the community. Despite the seriousness and pervasiveness of moral hazard, policymakers and scholars have failed to address this issue. This book fills this gap. It covers 200 years of moral hazard: from its origins in the 19th century to the bailouts announced in the aftermath of the COVID-19 outbreak. The book is divided into three parts. Part I deals with the ethics and other fundamental issues connected to moral hazard. Part II provides historical and empirical evidence on moral hazard in international finance. It examines in turn the role of the export credit industry, the international lender of last resort, and the IMF. Finally, Part III examines specific sectors such as automobile, banking, and the US industry at large. This is the first book to provide an interdisciplinary analysis of moral hazard and explain why addressing this issue has become crucial today. As such, it will attract interest from scholars across different fields, including economists, political scientists and lawyers.
Author : Inés Macho-Stadler
Publisher :
ISBN 13 :
Total Pages : pages
Book Rating : 4.:/5 (961 download)
Download or read book Moral Hazard written by Inés Macho-Stadler and published by . This book was released on 2016 with total page pages. Available in PDF, EPUB and Kindle. Book excerpt:
Download or read book Overconfidence and Moral Hazard written by and published by . This book was released on 2007 with total page pages. Available in PDF, EPUB and Kindle. Book excerpt:
Author : Florian Englmaier
Publisher :
ISBN 13 :
Total Pages : 50 pages
Book Rating : 4.:/5 (646 download)
Download or read book Optimal incentive contracts under moral hazard when the agent is free to leave written by Florian Englmaier and published by . This book was released on 2010 with total page 50 pages. Available in PDF, EPUB and Kindle. Book excerpt:
Author : Fouad Sabry
Publisher : One Billion Knowledgeable
ISBN 13 :
Total Pages : 579 pages
Book Rating : 4.:/5 (661 download)
Download or read book Moral Hazard written by Fouad Sabry and published by One Billion Knowledgeable. This book was released on 2024-02-03 with total page 579 pages. Available in PDF, EPUB and Kindle. Book excerpt: What is Moral Hazard The term "moral hazard" refers to a circumstance that occurs in the field of economics and describes a situation in which an economic actor has an incentive to expand its exposure to risk because it does not face the full costs of that risk. As an illustration, when a company is insured, it may be willing to take on additional risk since it is aware that its insurance will cover the costs connected with the risk. It is possible for a moral hazard to take place when, after a financial transaction has taken place, the actions of the party that is taking the risk change in a way that is detrimental to the party that is suffering the costs. How you will benefit (I) Insights, and validations about the following topics: Chapter 1: Moral hazard Chapter 2: Economic bubble Chapter 3: Debt Chapter 4: Contract theory Chapter 5: Adverse selection Chapter 6: Information asymmetry Chapter 7: Savings and loan crisis Chapter 8: Asset-backed security Chapter 9: Mortgage loan Chapter 10: Subprime mortgage crisis Chapter 11: Flight-to-quality Chapter 12: Subordinated debt Chapter 13: Subprime crisis impact timeline Chapter 14: Credit crunch Chapter 15: Subprime crisis background information Chapter 16: Interbank lending market Chapter 17: Government policies and the subprime mortgage crisis Chapter 18: Subprime mortgage crisis solutions debate Chapter 19: Securitization Chapter 20: Financial fragility Chapter 21: 2007-2008 financial crisis (II) Answering the public top questions about moral hazard. (III) Real world examples for the usage of moral hazard in many fields. Who this book is for Professionals, undergraduate and graduate students, enthusiasts, hobbyists, and those who want to go beyond basic knowledge or information for any kind of Moral Hazard.
Author : Heshan Sameera
Publisher :
ISBN 13 :
Total Pages : pages
Book Rating : 4.:/5 (13 download)
Download or read book Moral Hazard written by Heshan Sameera and published by . This book was released on 2019 with total page pages. Available in PDF, EPUB and Kindle. Book excerpt: In the literal sense, moral hazard relates to the adverse effects, from the perspective of an insurance company, which an insurer could have on the behavior of an insured. This situation arises from a common economic scenario in which an agent and a principle are in a situation of their choice in which the agent's actions have an externality on the principle. It is notable that the principle will always want to influence the actions of the agent. Such an influence will always occur in the forms of a contract, which allows the principle to compensate their agent contingent on their direct activities or the effects of such actions. For example, one of the extreme examples is that of an individual who is insured under a fire cover who may wish to set their property ablaze for them to obtain the insurance money. In this case, the insurer needs to have an ability to cover such actions in the insurance contract, which is the idea of the moral hazard. The purpose of this work is to consider the hidden information problem, which turns out to be a game between two actors in the economic field, one whom holds information that is mutually important that the other lacks. The article describes that the concept of moral hazard is useful for companies that enter in trading negotiations with each other since it helps them to design contracts that would take advantage of the risk that they hold in trading with such partners.
Author : Eva I. Hoppe
Publisher :
ISBN 13 :
Total Pages : 0 pages
Book Rating : 4.:/5 (137 download)
Download or read book Hidden Action and Outcome Contractibility written by Eva I. Hoppe and published by . This book was released on 2019 with total page 0 pages. Available in PDF, EPUB and Kindle. Book excerpt: In a laboratory experiment with 754 participants, we study the canonical one-shot moral hazard problem, comparing treatments with unobservable effort to benchmark treatments with verifiable effort. In our experiment, the players endogenously negotiate contracts. In line with contract theory, the contractibility of the outcome plays a crucial role when effort is a hidden action. If the outcome is contractible, most players overcome the hidden action problem by agreeing on incentive-compatible contracts. Communication is helpful, since it may reduce strategic uncertainty. If the outcome is non-contractible, in most cases low effort is chosen whenever effort is a hidden action. However, communication leads the players to agree on larger wages and substantially mitigates the underprovision of effort.
Author : Anastasios Papanastasiou
Publisher :
ISBN 13 :
Total Pages : 10 pages
Book Rating : 4.:/5 (13 download)
Download or read book Moral Hazard and Horizontal Information written by Anastasios Papanastasiou and published by . This book was released on 2017 with total page 10 pages. Available in PDF, EPUB and Kindle. Book excerpt: This paper examines a moral hazard problem where the principal observes a location signal of the agent's unobserved effort. When the agent incurs costlier effort the demand for the agent's services is ex-ante more spread out over a location measure of demand. If location outcomes are informative about the agents action and verifiable, the principal can improve efficiency by contracting on such information. The introduction of location information suggests that the optimal contract that maximizes expected market size can be locally decreasing in sales when small-market location outcomes are a strong signal of high effort.
Author : Jean-Jacques Laffont
Publisher : Princeton University Press
ISBN 13 : 1400829453
Total Pages : 436 pages
Book Rating : 4.4/5 (8 download)
Download or read book The Theory of Incentives written by Jean-Jacques Laffont and published by Princeton University Press. This book was released on 2009-12-27 with total page 436 pages. Available in PDF, EPUB and Kindle. Book excerpt: Economics has much to do with incentives--not least, incentives to work hard, to produce quality products, to study, to invest, and to save. Although Adam Smith amply confirmed this more than two hundred years ago in his analysis of sharecropping contracts, only in recent decades has a theory begun to emerge to place the topic at the heart of economic thinking. In this book, Jean-Jacques Laffont and David Martimort present the most thorough yet accessible introduction to incentives theory to date. Central to this theory is a simple question as pivotal to modern-day management as it is to economics research: What makes people act in a particular way in an economic or business situation? In seeking an answer, the authors provide the methodological tools to design institutions that can ensure good incentives for economic agents. This book focuses on the principal-agent model, the "simple" situation where a principal, or company, delegates a task to a single agent through a contract--the essence of management and contract theory. How does the owner or manager of a firm align the objectives of its various members to maximize profits? Following a brief historical overview showing how the problem of incentives has come to the fore in the past two centuries, the authors devote the bulk of their work to exploring principal-agent models and various extensions thereof in light of three types of information problems: adverse selection, moral hazard, and non-verifiability. Offering an unprecedented look at a subject vital to industrial organization, labor economics, and behavioral economics, this book is set to become the definitive resource for students, researchers, and others who might find themselves pondering what contracts, and the incentives they embody, are really all about.
Author : Archishhman Chakravarty
Publisher :
ISBN 13 : 9782854186833
Total Pages : 31 pages
Book Rating : 4.1/5 (868 download)
Download or read book Moral Hazard, Aggregate Risk and Nominal, Linear Financial Contracts written by Archishhman Chakravarty and published by . This book was released on 1999 with total page 31 pages. Available in PDF, EPUB and Kindle. Book excerpt:
Author : Alessandro Citanna
Publisher :
ISBN 13 : 9782854186994
Total Pages : 28 pages
Book Rating : 4.1/5 (869 download)
Download or read book Moral Hazard and Linear Contracts written by Alessandro Citanna and published by . This book was released on 2000 with total page 28 pages. Available in PDF, EPUB and Kindle. Book excerpt:
Author : James Foust
Publisher :
ISBN 13 :
Total Pages : 36 pages
Book Rating : 4.:/5 (863 download)
Download or read book Payment Schemes and Moral Hazard written by James Foust and published by . This book was released on 2013 with total page 36 pages. Available in PDF, EPUB and Kindle. Book excerpt: In a principal-agent relationship, the principal offers a take-it-or-leave-it contract to the agent, who decides to either accept it or not. In game theory terminology, the principal agent relationship is a Stackelberg game in which the principal is the leader, proposing the contract, and the agent is the follower, choosing to accept or reject the proposal. Examples of such relationships are plentiful, such as a principal bank manager hiring an agent employee to work as a teller, a principal land-owner acting hiring an agent farmer to grow crops on her land, or an insurance company offering a home insurance plan to a homeowner. The principal-agent problem concerns how the principal should structure the proposed contract to best incentivize the agent to perform in the way the principal would prefer, taking into account that there are informational asymmetries between the principal and the agent due to the agent having some kind of "private information." Information asymmetries between principal and agent fall into two categories: the agent might have private information about their own characteristics, which gives rise to adverse selection problems; or the agent might have private information about what actions he takes after agreeing to the contract, which gives rise to moral hazard problems. In this paper, I focus on a model with moral hazard. The texts by Kreps and Salanié both offer good expositions of canonical adverse selection and moral hazard problems, which I used as a starting point for this paper. The survey of different extensions of the principal-agent model by Sappington provided a high-level guide to different sub-problems and primary sources. To motivate the model analyzed in this paper, suppose you own several tracts of land that are suitable for agriculture. You want to set up farms on these tracts of land, but you lack the time or expertise to farm the land yourself. You decide, then, to hire several farmers to set up and manage farms on your land. The farmers work year-round and, come harvest time, you pay each of them a sum of money based on their total production. Your challenge is to decide how much money to pay each farmer. Ideally, you would like to be able to pay each worker for the amount of effort that they put in. Unfortunately, you are only able to observe each farmer's output, and there are factors other than the farmer's effort level that affect output. For instance, the amount of rainfall is a random variable that affects all farmers' output equally, but which you are unable to observe. There are also idiosyncratic random variables unique to each farmer that represent the effects of soil condition, pests, and other similar concerns on the tract of land that farmer is working. All else equal, each farmer would prefer to work as little as possible, because they find working displeasurable. As the principal, however, you want the farmers to work as hard as is necessary to maximize your profits. The problem you face is how to structure the farmers' payment scheme so as to align their incentives with your own. The following analysis will compare individual contracts, in which each agent's payment is based only on the realized magnitude of their output, and tournament payment schemes, in which each agent's payment is based only on the ordinal ranking of their realized output relative to that of all other agents'. Much of the model notation as well as the results from Section 5 are an expanded exposition of results from a paper by Green and Stokey. Lazear and Rosen provided helpful intuition for the comparison of contracts and tournaments, and some of the results from earlier sections of the paper are due to Grossman and Hart.
