Incentive compatibility and pricing under moral hazard
نویسندگان
چکیده
منابع مشابه
A unifying approach to incentive compatibility in moral hazard problems
A new approach to moral hazard is presented. Once local incentive compatibility is satisfied, the problem of verifying global incentive compatibility is shown to be isomorphic to the problem of comparing two classes of distribution functions. Thus, tools from choice under uncertainty can be brought to bear on the problem. The approach allows classic justifications of the first-order approach (F...
متن کاملSupplement to “ A unifying approach to incentive compatibility in moral hazard problems
Recall that the random variables are said to be (positively) affiliated if the term inside the last parentheses is always nonnegative, while they are “negatively” affiliated if the term is always nonpositive. See Milgrom and Weber (1982) and Müller and Stoyan (2002). Thus, the sign determines whether variables are positively or negatively dependent. Technically, the numerical magnitude of the t...
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This thesis consists of four self-contained essays that compare real-world incentive schemes used to mitigate moral hazard problems under non-verifiable performance. The first essay contrasts the impact of the precision of performance measurement on wage costs in Uand J-type tournaments. In U-type tournaments prizes are fixed. In J-type tournaments only an overall wage sum is specified. The pri...
متن کاملMoral Hazard, Incentive Contracts and Risk: Evidence from Procurement
Deadlines and penalties are widely used to incentivize effort. We model how these incentive contracts affect the work rate and time taken in a procurement setting, characterizing the efficient contract design. Using new micro-level data on Minnesota highway construction contracts that includes day-by-day information on work plans, hours actually worked and delays, we find evidence of moral haza...
متن کاملIncentives and competition under moral hazard
The work introduces a simple framework to study the relationship between competition and incentives under non-exclusivity. We characterize the equilibria of an insurance market where intermediaries compete over the contracts they offer to a single consumer in the presence of moral hazard. Non-exclusivity is responsible for under-insurance and positive profits in an otherwise competitive set-up....
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ژورنال
عنوان ژورنال: Review of Economic Dynamics
سال: 2005
ISSN: 1094-2025
DOI: 10.1016/j.red.2004.10.005