Showing 1 - 10 of 11
The size of adverse selection and moral hazard effects in health insurance markets has important policy implications.  For example, if adverse selection effects are small while moral hazard effects are large, conventional remedies for inefficiencies created by adverse selection (e.g., mandatory...
Persistent link: https://www.econbiz.de/10011004305
This paper studies the contracting problem between banks and their bankers, embedded in a competitive labour market for banker talent.  To motivate effort banks must use some variable remuneration.  Such remuneration introduces a risk-shifting problem by creating incentives to inflate early...
Persistent link: https://www.econbiz.de/10008914377
This study outlines a new theory linking industrial structure to optimal employment contracts and value reducing risk taking.  Firms hire their executives using optimal contracts derived within a competitive labour market.  To motivate effort firms must use some variable remuneration.  Such...
Persistent link: https://www.econbiz.de/10009320222
This paper investigates the incentives of investors to set up an actively managed fund in an emerging market or asset class. The analysis highlights the role of agency problems between fund managers and investors in determining this entry decision. It is shown that investors may wish to set up a...
Persistent link: https://www.econbiz.de/10010661424
We review two proposals for debt forgiveness; the Highly Indebted Poor Country Initiative (HIPC) and the Jubilee 2000 Coalition Initiative (J2K). We then consider the workhorse model of debt forgiveness (Krugman 1988). We show that the workhorse model solution is a sub-optimal contract, where...
Persistent link: https://www.econbiz.de/10010605303
We show that introducing an external capital market with information asymmetry into a product market model reduces opportunistic substitution of sub-standard goods and encourages producers to concentrate on long-run reputation building.  We test this result with a laboratory experiment.  We...
Persistent link: https://www.econbiz.de/10011004366
This paper develops a framework for the analysis of how asymmetric information impacts on adverse selection and market efficiency.  We adopt Akerlof's (1970) unit-demand model extended to a setting with multidimensional public and private information.  Adverse selection and efficiency are...
Persistent link: https://www.econbiz.de/10011004465
In this paper we study the delegation of a production process in a three-tier hierarchy. The principal contracts directly only with the supplier that produces the first input leaving him in charge of the contract for the production of the second input. We allow the principal to costlessly...
Persistent link: https://www.econbiz.de/10005090666
An increasingly important organisational design problem for many firms is to recoup general human capital rents while maintaining attractive career prospects for workers. We explore the role of information management in this context. In our model, an information management policy determines the...
Persistent link: https://www.econbiz.de/10005047782
Negotiations often take long a time even if a delay in the agreement is inefficient. One typical explanation is the existence of private information of at least one party; the time is then a discriminating instrument. The paper starts by pointing out that this result does not hold once the...
Persistent link: https://www.econbiz.de/10005047880