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We consider the cost of providing incentives through tournaments when workers are inequity averse and performance … envy depending on the costs of assessing performance. More envious employees are preferred when these costs are high, less …
Persistent link: https://www.econbiz.de/10005696268
We propose a model in which assets with identical cash flows can trade at different prices. Infinitely-lived agents can establish long positions in a search spot market, or short positions by first borrowing an asset in a search repo market. We show that short-sellers can endogenously...
Persistent link: https://www.econbiz.de/10005504616
A vast body of empirical studies lends support to the incentive effects of rank-order tournaments. Evidence comes from … tournaments may bias these non-experimental studies, whereas short task duration or lack of distracters may limit the external … where students selected themselves into tournaments with different prizes. Within each tournament the best performing …
Persistent link: https://www.econbiz.de/10005136509
Risk classification refers to the use of observable characteristics by insurers to group individuals with similar expected claims, compute the corresponding premiums, and thereby reduce asymmetric information. With perfect risk classification, premiums fully reflect the expected cost associated...
Persistent link: https://www.econbiz.de/10010693198
A large theoretical literature shows that competition reduces banks' franchise values and induces them to take more risk. Recent research contradicts this result: When banks charge lower rates, their borrowers have an incentive to choose safer investments, so they will in turn be safer. However,...
Persistent link: https://www.econbiz.de/10005124382
Evidence suggests that unemployed individuals can sometimes affect their job prospects by undertaking a costly action like deciding to move or retrain. Realistically, such an opportunity only arises for some individuals and the identity of those may be unobservable ex-ante. The problem of...
Persistent link: https://www.econbiz.de/10005504238
How damaging is competition between bank regulators? This paper models regulators that compete because they want to supervise more banks. Both banks' risk profiles and their access to wholesale funding are endogenous, leading to rich interactions. The sensitivity of regulatory standards to bank...
Persistent link: https://www.econbiz.de/10008577817
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 transactions, and can influence consumption allocation. We show...
Persistent link: https://www.econbiz.de/10008682880
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
In this paper we compare the welfare effects of unemployment insurance (UI) with an universal basic income (UBI) system in an economy with idiosyncratic shocks to employment. Both policies provide a safety net in the face of idiosyncratic shocks. While the unemployment insurance program should...
Persistent link: https://www.econbiz.de/10011071798