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Risk Taking and Optimal Contracts for Money Managers

Palomino, Frédéric; Prat, Andrea - C.E.P.R. Discussion Papers - 1999

Recent empirical work suggests a strong connection between the incentives money managers are offered and their risk … not only effort exertion but also risk taking behavior. The moral hazard problem with risk taking involves an incentive …-compatibility constraint on risk, which we characterize. We distinguish between one period and several periods. In the former case, under mild …

Persistent link: https://www.econbiz.de/10005504241

A Dynamic Analysis of the Demand for Health Insurance and Health Care

Bolhaar, Jonneke; Lindeboom, Maarten; van der Klaauw, Bas - C.E.P.R. Discussion Papers - 2008

We investigate the presence of moral hazard and advantageous or adverse selection in a market for supplementary health insurance. For this we specify and estimate dynamic models for health insurance decisions and health care utilization. Estimates of the health care utilization models indicate...

Persistent link: https://www.econbiz.de/10005504294

Moral Hazard and Capital Structure Dynamics

Dewatripont, Mathias; Legros, Patrick; Matthews, Steven A - C.E.P.R. Discussion Papers - 2002

We base a contracting theory for a start-up firm on an agency model with observable but nonverifiable effort, and renegotiable contracts. Two essential restrictions on simple contracts are imposed: the entrepreneur must be given limited liability, and the investor's earnings must not decrease in...

Persistent link: https://www.econbiz.de/10005498043

Bonus Culture: Competitive Pay, Screening, and Multitasking

Bénabou, Roland; Tirole, Jean - C.E.P.R. Discussion Papers - 2013

away from less easily contractible tasks such as long-term investments, risk management and within-firm cooperation. Under …

Persistent link: https://www.econbiz.de/10011083769

Search and Work in Optimal Welfare Programs

Pavoni, Nicola; Setty, Ofer; Violante, Giovanni L - C.E.P.R. Discussion Papers - 2013

Some existing welfare programs (“work-first”) require participants to work in exchange for benefits. Others (“job search-first”) emphasize private job-search and provide assistance in finding and retaining a durable employment. This paper studies the optimal design of welfare programs...

Persistent link: https://www.econbiz.de/10011083773

Credence Goods, Costly Diagnosis, and Subjective Evaluation

Bester, Helmut; Dahm, Matthias - C.E.P.R. Discussion Papers - 2014

We study contracting between a consumer and an expert. The expert can invest in diagnosis to obtain a noisy signal about whether a low-cost service is sufficient or whether a high-cost treatment is required to solve the consumer’s problem. This involves moral hazard because diagnosis effort...

Persistent link: https://www.econbiz.de/10011084241

Basic versus supplementary health insurance: moral hazard and adverse selection

Boone, Jan - C.E.P.R. Discussion Papers - 2014

This paper introduces a tractable model of health insurance with both moral hazard and adverse selection. We show that government sponsored universal basic insurance should cover treatments with the biggest adverse selection problems. Treatments not covered by basic insurance can be covered on...

Persistent link: https://www.econbiz.de/10011084307

A Quantitative Analysis of the Retail Market for Illicit Drugs

Galenianos, Manolis; Gavazza, Alessandro - C.E.P.R. Discussion Papers - 2015

We develop a theoretical framework to study illicit drugs markets and we estimate it using data on purchases of crack cocaine. Buyers are searching for high-quality drugs, but they determine drugs' quality (i.e., their purity) only after consuming them. Hence, sellers can rip off first-time...

Persistent link: https://www.econbiz.de/10011145480

Dynamic Security Design

Biais, Bruno; Mariotti, Thomas; Plantin, Guillaume; … - C.E.P.R. Discussion Papers - 2004

, the greater the liquidation risk. The optimal contract can be implemented by holding cash reserves and by issuing debt and …

Persistent link: https://www.econbiz.de/10005067486

Can Competition in the Credit Market be Excessive?

Caminal, Ramon; Matutes, Carmen - C.E.P.R. Discussion Papers - 1997

We study the welfare implications of market power in a model where banks choose between credit rationing and monitoring in order to alleviate an underlying moral-hazard problem. We show that the effect of banks’ market power on social welfare is the result of two countervailing effects. On the...

Persistent link: https://www.econbiz.de/10005656189