This paper proposes that the decline in federal disability insurance (DI) screening stringency raises the incentive of being uninsured. To support it, we provide a theoretical model and empirical evidence. JEL classification: I13, I18, H31, H51, H55

This paper analyzes the wealth and risk incentive effects of managerial options and shareholdings on the hedging probability of UK listed Alternative Investment Market (AIM) companies. We find that the wealth incentive effect provided by managerial option holdings increases the hedging likelihood. On the contrary, the wealth incentive effect provided by managerial shareholdings decreases the he...

In this paper we provide experimental evidence indicating that incentive contracts may cause a strong crowding out of reciprocity-driven voluntary cooperation. This crowding out effect constitutes costs of incentive provision that have been largely neglected by economists. In our experiments the crowding out effect is so strong that the incentive contracts are less efficient than contracts with...

We characterize incentive compatibility in multi-unit auctions with multi-dimensional types. An allocation mechanism is incentive compatible if and only if it is nondecreasing in marginal utilities (NDMU). The notion of incentive compatibility we adopt is dominant strategy in private value models and ex post incentive compatibility in models with interdependent values. NDMU is the following req...

We consider a model of resource dependence where only the seller knows the resource reserve. The model captures phenomena such as trust in the relationship and “bribing” for continuation through generous supplies. It also explains supply shocks in equilibrium: privately informed sellers have incentives to reveal their types too late through a supply disruption after which their exploit the cons...

What is the best way of providing incentives to a team of agents? Agency theory has given a number of answers in the past three decades on the choice between collective and relative incentive provision. We present a broad overview of this rich literature through a simple model. While the early contributions emphasize the role of performance comparison and competition in motivating agents, more ...

This article reviews recent developments in the theory of committee decisionmaking. A committee consists of self-interested members that make a public decision by aggregating imperfect information dispersed among them according to a pre-specified decision rule. We focus on costly information acquisition, strategic information aggregation, and rules and processes that enhance the quality of the ...

Optimal Incentive Contracts under Inequity Aversion We analyze the Moral Hazard problem, assuming that agents are inequity averse. Our results differ from conventional contract theory and are more in line with empirical findings than standard results. We find: First, inequity aversion alters the structure of optimal contracts. Second, there is a strong tendency towards linear sharing rules. Thi...

We consider a model of cake-eating with private information. The model captures phenomena such as trust and “security of supply” in resource-use relationships. It also predicts supply shocks as an equilibrium phenomenon: privately informed sellers have incentives to reveal resource scarcity too late, through a supply disruption, after which they exploit the consumers’ inability to immediately a...

A firm may strategically decrease capacity to gain bargaining power over its suppliers. Equilibrium models of competition imply that the incentive to reduce capacity to gain buyer power is small because the buyer captures all available surplus by excluding even a single supplier. However, these models can rest on behaviorally untenable actions prescribed to suppliers in equilibrium. In this pap...