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Moral Hazard and Bargaining Power Dominique Demougin Humboldt University, Berlin Carsten Helm Technical University, Darmstadt Abstract. We introduce bargaining power in a moral hazard framework where parties are risk-neutral and the agent is financially constrained. We show that the same contract emerges if the concept of bargaining power is analyzed in either of the following three frameworks: in a standard principal–agent (P–A) framework by varying the agent’s outside opportunity, in an alternating offer game, and in a generalized Nash-bargaining game. However

issue of our analysis is that whereas individual emissions are assumed to be observed by the ER, abatement effort is not. This assumption is important, since environmental policies designed by the ER on an allowance-fine basis are necessarily contingent on the set of observable variables. The purpose of this paper is to provide a first step in the analysis of the moral hazard problem that arises in a context of tradeable emission permits when emissions are stochastic. We focus on a moral hazard problem with a single principal and multiple agents, the ER and the

The B.E. Journal of Theoretical Economics Topics Volume 7, Issue 1 2007 Article 36 Pareto Optima and Competitive Equilibria with Moral Hazard and Financial Markets Luca Panaccione∗ ∗Luiss Guido Carli, lpanaccione@luiss.it Recommended Citation Luca Panaccione (2007) “Pareto Optima and Competitive Equilibria with Moral Hazard and Fi- nancial Markets,” The B.E. Journal of Theoretical Economics: Vol. 7: Iss. 1 (Topics), Article 36. Pareto Optima and Competitive Equilibria with Moral Hazard and Financial Markets∗ Luca Panaccione Abstract In this paper, we study a two

-- Economists’ Voice October, 2008© The Berkeley Electronic Press Letter: The Dangers of Forgetting Moral Hazard ManFrEDO a. Dix Dear Editors: Allen Barton, in a letter responding to Luigi Zingales’ criticism to Secretary of the Treasury Henry Paulson’s bailout proposal, suggests that instead of bailing out institutions, the money should go to families having trouble paying their mort- gages. Professor Barton says “The mortgage defaulters would pay an ‘affordable’ share based on their household income, and the government’s subsidy would be spread over

opportunistic behaviour (moral hazard) because they report some injuries as work related on Mondays when they are really out-of-work injuries. This arises due to the economic incentives generated by the institutional settings in place in certain countries. In most countries, workers’ compensation (WC) insurance pays for the cost of medical treatment and provides partial income replacement for lost wages caused by work-related injury. Therefore, workers with no health insurance coverage can delay reporting out-of-work injuries suffered during the weekend to the Monday in order

for many during debate in the House: It was the Federal Reserve bank that, during the war, increased the money in actual circulation—doubled it—and then in 1920 and 1921 contracted it—virtually cut it square in two. I mean the money that was actually in circulation at that time . . . the people know that it was the Federal Reserve octopus that contracted the currency in the nation as a whole, and at the same time, increased it in the large 10 Moral Hazard M O R A L H A Z A R D 105 cities—increased it for the gamblers in stocks, bonds and the necessities of

-- Economists’ Voice December, 2008 Letter: The Moral Hazard of Bailing Out Borrowers ALLEn BArTOn © The Berkeley Electronic Press Dear Editors: Manfredo Dix criticizes my housing proposal on the grounds that it would create moral hazard. I thought I had made it clear that the “bailout” of borrowers who took out sub- prime mortgages would apply to those taken out prior to the Great Financial Crisis of 2008. The remedy for the “toxic paper” would apply to what was outstanding, not to all future mortgages. However, I noted that the “bad managers” would be

CHAPTER 8 CITIZENSHIP AND MORAL HAZARD The liberty of the individual must be thus far limited: he must not make himself a nuisance to other people. J.S. Mill Citizenship and welfare rights Basic human needs are established as human rights by the argument of the previous chapter. This chapter considers the question of whether they are to be seen as rights against the state - as components of citizenship. The history of the welfare state is the story of the development and defence of citizenship welfare rights. This chapter discusses whether theoretical

disproportionately high levels of venture capital investment concentrated in their high-tech industries compared to other developed nations (see Figure 1 for details). In order to illustrate the importance of reallocation of control rights contingent on performance in the high-tech sector, I develop a principal-agent model of start-up financing with information asymmetry, moral hazard, and R&D investments. In particular, the information asymmetry is captured by the setup in which the entrepreneur learns the true “type” of the project after R&D investments are made while the