Social Norms and Moral Hazard.

The probability of income loss depends on talent and effort. Effort has positive externalities and therefore individuals are awarded status in proportion to their perceived diligence. The social norm requires more effort from individuals perceived as more talented. But talent is private information and individuals cuningly choose effort so as to manipulate the public perception of their talent. We analyze the workings of social insurance system in this setting.

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Year of publication:	1997
Authors:	Dufwenberg, M. ; Lundholm, M.
Institutions:	Nationalekonomiska Institutionen, Uppsala Universitet
Subject:	SOCIAL INSURANCE \| MORAL HAZARD

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Series:	Uppsala - Working Paper Series.
Type of publication:	Book / Working Paper
Notes:	22 pages
Classification:	A14 - Sociology of Economics ; C72 - Noncooperative Games ; D81 - Criteria for Decision-Making under Risk and Uncertainty ; D82 - Asymmetric and Private Information ; G28 - Government Policy and Regulation ; H55 - Social Security and Public Pensions ; I38 - Government Policy; Provision and Effects of Welfare Programs ; J65 - Unemployment Insurance; Severance Pay; Plant Closings
Source:	RePEc - Research Papers in Economics

Persistent link: https://www.econbiz.de/10005779767