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Sorting the Good Guys from Bad: On the Optimality of Deterministic Audit with Ex-Ante Information Acquisition

Menichini, Annamaria; Simmons, Peter - Centro Studi di Economia e Finanza (CSEF) - 2008

In a costly state verification model under commitment the principal may acquire a costly public and imperfectly revealing signal before or after contracting. If the project remains profitable after all signal realisations, optimally the signal is collected, if at all, after contracting, and it...

Persistent link: https://www.econbiz.de/10005750365

Contracts with Wishful Thinkers

Menichini, Annamaria; Immordino, Giovanni; Romano, … - Centro Studi di Economia e Finanza (CSEF) - 2010

Managers with anticipatory emotions have higher current utility if they are optimistic about the future. We study an employment contract between an (endogenously) optimistic manager and realistic investors. The manager faces a trade-off between ensuring that the chosen levels of effort reflect...

Persistent link: https://www.econbiz.de/10008646907

On Repeated Moral Hazard with a Present Biased Agent

Balletta, Luigi; Immordino, Giovanni - Centro Studi di Economia e Finanza (CSEF) - 2013

This paper introduces time inconsistent preferences into a moral hazard setting where the agent is risk-averse. We …. Finally, we show that in a setting with a risk-neutral agent and limited liability everything is as if the principal faces a …

Persistent link: https://www.econbiz.de/10010801006

Advantageous Selection in the Private Hospital Insurance Market in Europe: Evidence on the Role of Education and Cognitive Ability

Avitabile, Ciro - Centro Studi di Economia e Finanza (CSEF) - 2009

50+, in eight European countries. I first test whether, conditional on health insurance companies' risk assessments …, individuals have residual private information on insurance determinants other than their risk type. My results show that there are … health information is an important determinant of the decision to buy private hospital health insurance for individuals aged …

Persistent link: https://www.econbiz.de/10005750346

A Simple Impossibility Result in Behavioral Contract Theory

Menichini, Annamaria; Immordino, Giovanni; Romano, … - Centro Studi di Economia e Finanza (CSEF) - 2010

induce a positive interim emotional effect. We show that it may be impossible to achieve the first-best, even though the risk …

Persistent link: https://www.econbiz.de/10008683346

Optimal Contracting with Altruism and Reciprocity

Bassi, Matteo; Pagnozzi, Marco; Piccolo, Salvatore - Centro Studi di Economia e Finanza (CSEF) - 2013

Motivated by the recent experimental evidence on altruistic behavior, we study a simple principal-agent model where each player cares about other players’ utility, and may reciprocate their attitude towards him. We show that, relative to the selfish benchmark, efficiency improves when players...

Persistent link: https://www.econbiz.de/10011082502

Reciprocity in the Principal Multiple Agent Model

Marco, Giuseppe De; Immordino, Giovanni - Centro Studi di Economia e Finanza (CSEF) - 2012

This paper studies how incentives are affected by intention-based reciprocity preferences when the principal hires many agents. Our results describe the agents' psychological attitudes required to sustain a given strategy profile. We also show that hiring reciprocal agents to implement a first...

Persistent link: https://www.econbiz.de/10010942479

Is Historical Cost Accounting a Panacea? Market Stress, Incentive Distortions, and Gains Trading

Ellul, Andrew; Jotikasthira, Chotibhak; Lundblad, … - Centro Studi di Economia e Finanza (CSEF) - 2014

regulations, alter financial institutions’ trading behavior. The insurance industry provides a natural laboratory to explore these …

Persistent link: https://www.econbiz.de/10010942483

Access Price Cap Mechanisms and Industry Structure with Information Acquisition

Stroffolini, Francesca - Centro Studi di Economia e Finanza (CSEF) - 2008

This paper considers a network industry characterized by an upstream natural monopoly with cost uncertainty, regulated through an access price mechanism, and an unregulated downstream market with Cournot competition. The upstream monopolist can acquire information on the upstream cost while the...

Persistent link: https://www.econbiz.de/10005750352

Credibility and Commitment of Monetary Policy in Open Economies

D'Amato, Marcello; Martina, Riccardo - Centro Studi di Economia e Finanza (CSEF) - 2000

In this paper we study the delegation of monetary policy to independent central bankers in a two country world with monetary spill-overs. The paper shows that under imperfect commitment and private information of the Central Bankers about their objectives the optimal degree of commitment depends...

Persistent link: https://www.econbiz.de/10005750364