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Dynamic Supplier Contracts under Asymmetric Inventory Information

Zhang, Hao; Nagarajan, Mahesh; Sosic, Greys - 2010

In this paper, we examine a supply chain in which a single supplier sells to a downstream newsvendor-type retailer. We make two assumptions that enrich this simple and well-understood model. First, we consider a multi-period model, in which the sequence of events is as follows. In a period, t,...

Persistent link: https://www.econbiz.de/10014047671

The Dynamics of Seller Reputation : Theory and Evidence from Ebay

Cabral, Luís M. B.; Hortaçsu, Ali - 2021

We propose a basic theoretical model of eBay's reputation mechanism, derive a series of implications and empirically … receives a negative rating for the first time his reputation decreases and so does his effort level. This implies a decline in … more to gain from buying a reputation' by building up a record of favorable feedback through purchases rather than sales …

Persistent link: https://www.econbiz.de/10013231450

The Welfare Economics of Moral Hazard

Arnott, Richard; Stiglitz, Joseph E. - 2022

This paper shows that, except in certain limiting cases, competitive equilibrium with moral hazard is constrained inefficient. The first section compares the competitive equilibrium and the constrained social optimum in a fairly general model, and identifies types of market failure. Each of the...

Persistent link: https://www.econbiz.de/10014156811

The Pay-as-You-Go Pension System as a Fertility Insurance and Enforcement Device

Sinn, Hans-Werner - 2022

It is argued that a PAYGO system may have useful allocative functions in that it serves as an insurance against not having children and as an enforcement device for rotten kid' who are unwilling to pay their parents a pension. It is true that the system has amoral hazard effect in terms of...

Persistent link: https://www.econbiz.de/10014158127

Optimal Financing for R&D-Intensive Firms

Thakor, Richard T. - 2017

We develop a theory of optimal financing for R&D-intensive firms that uses their unique features—large capital outlays, long gestation periods, high upside, and low probabilities of R&D success—that explains three prominent stylized facts about these firms: their relatively low use of debt,...

Persistent link: https://www.econbiz.de/10012947632

Selection on Moral Hazard in Health Insurance

Einav, Liran - 2015

In this paper we explore the possibility that individuals may select insurance coverage in part based on their anticipated behavioral response to the insurance contract. Such "selection on moral hazard" can have important implications for attempts to combat either selection or moral hazard. We...

Persistent link: https://www.econbiz.de/10013038050

The Generalized Informativeness Principle

Chaigneau, Pierre - 2014

This paper shows that the informativeness principle, as originally formulated by Holmstrom (1979), does not hold if the first-order approach is invalid. We introduce a "generalized informativeness principle" that takes into account non-local incentive constraints and holds generically, even...

Persistent link: https://www.econbiz.de/10013040535

Financial Safety Nets

Bengui, Julien - 2016

In this paper, we study the optimal design of financial safety nets under limited private credit. We ask when it is optimal to restrict ex ante the set of investors that can receive public liquidity support ex post. When the government can commit, the optimal safety net covers all investors....

Persistent link: https://www.econbiz.de/10012983670

Do Digital Platforms Reduce Moral Hazard? The Case of Uber and Taxis

Liu, Meng - 2018

Digital platforms like Uber can enhance market transparency and mitigate moral hazard via ratings of buyers and sellers, real-time monitoring, and low-cost complaint channels. We compare driver choices at Uber with taxis by matching trips so they are subject to the same optimal route. We also...

Persistent link: https://www.econbiz.de/10012911461

Eyes Wide Shut? The Moral Hazard of Mortgage Insurers During the Housing Boom

Bhutta, Neil - 2018

In the U.S. mortgage market, private mortgage insurance (PMI) is mandated for high-leverage mortgages purchased by Fannie Mae and Freddie Mac to serve as a private market check on GSE risk-taking. However, we document that PMI firms dramatically expanded insurance on high-risk mortgages at the...

Persistent link: https://www.econbiz.de/10012914265