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with effort-determined probability. We show that if insurance against a negative shock is sufficiently incomplete, then … standard functional form restrictions ensure that individual objective functions are optimized by an effort and insurance … combination that is unique and satisfies first- and second-order conditions. Modeling insurance incompleteness in terms of costly …
Persistent link: https://www.econbiz.de/10010329137
with effort-determined probability. We show that if insurance against a negative shock is sufficiently incomplete, then … standard functional form restrictions ensure that individual objective functions are optimized by an effort and insurance … combination that is unique and satisfies first- and second-order conditions. Modeling insurance incompleteness in terms of costly …
Persistent link: https://www.econbiz.de/10010722701
We characterize how public insurance schemes are constrained by hidden financial transactions. When non …-exclusive private insurance entails increasing unit transaction costs, public transfers are only partly offset by hidden private … of insurance on unobservable effort and saving choices as well as the relative cost of public and private insurance …
Persistent link: https://www.econbiz.de/10010274703
We examine a situation where efforts on different tasks positively affect production but are not separately verifiable and where the manager (principal) and the worker (agent) have different ideas about how production should be carried out: agents prefer a less efficient way of production. We...
Persistent link: https://www.econbiz.de/10010267331
This paper offers a rationale for limiting the delegation of (real) authority, which neither relies on insurance …
Persistent link: https://www.econbiz.de/10010262786
We characterize how public insurance schemes are constrained by hidden financial transactions. When non …-exclusive private insurance entails increasing unit transaction costs, public transfers are only partly offset by hidden private … of insurance on unobservable effort and saving choices as well as the relative cost of public and private insurance …
Persistent link: https://www.econbiz.de/10008678696
We analyze dynamic interactions between market insurance, the stock of insurable assets and liquid wealth accumulation … representative agent demands a nonnegligible amount of market insurance. The deductible is substantially higher than in static models … because agents can time-diversify their risk. Market insurance implies welfare gains of around .6% in terms of non …
Persistent link: https://www.econbiz.de/10010262542
This paper adds to the current literature on incomplete contracting that argues that deviating from a complete information, transaction-cost free environment may be may generate valuable insights. We achieve this by assuming bargaining with asymmetric information. We consider the consequences of...
Persistent link: https://www.econbiz.de/10010262108
This paper analyses the welfare effects of price restrictions on private contracting in a world where agents have a limited cognitive ability. People compute the costs and benefits of entering a transaction with an error. The government knows the distribution of true costs and benefits as well...
Persistent link: https://www.econbiz.de/10010262616
optima, non-linear income taxation is a key complement to unemployment insurance. According to the level of the workers …
Persistent link: https://www.econbiz.de/10010276945