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An Adverse Selection Model of Optimal Unemployment Insurance

Hagedorn, Marcus; Kaul, Ashok; Mennel, Tim - Institute for the Study of Labor (IZA) - 2002

We derive the shape of optimal unemployment insurance (UI) contracts when agents can exert search effort but face different search costs and have private information about their type. We derive a recursive solution of our dynamic adverse selection problem with repeated moral hazard. Conditions...

Persistent link: https://www.econbiz.de/10005762054

Bonus Culture: Competitive Pay, Screening, and Multitasking

Benabou, Roland; Tirole, Jean - Institute for the Study of Labor (IZA) - 2013

This paper analyzes the impact of labor market competition and skill-biased technical change on the structure of compensation. The model combines multitasking and screening, embedded into a Hotelling-like framework. Competition for the most talented workers leads to an escalating reliance on...

Persistent link: https://www.econbiz.de/10010635587

Second-Degree Moral Hazard in a Real-World Credence Goods Market

Balafoutas, Loukas; Kerschbamer, Rudolf; Sutter, Matthias - Institute for the Study of Labor (IZA) - 2013

Empirical literature on moral hazard focuses exclusively on the direct impact of asymmetric information on market outcomes, thus ignoring possible repercussions. We present a field experiment in which we consider a phenomenon that we call second-degree moral hazard – the tendency of the supply...

Persistent link: https://www.econbiz.de/10011156456

Dynamic Contracts and Learning by Doing

Prat, Julien - Institute for the Study of Labor (IZA) - 2014

This paper studies the design of optimal contracts in dynamic environments where agents learn by doing. We derive a condition under which contracts are fully incentive compatible. A closed-form solution is obtained when agents have CARA utility. It shows that human capital accumulation...

Persistent link: https://www.econbiz.de/10010744663

Optimal Incentive Contracts under Moral Hazard When the Agent Is Free to Leave

Englmaier, Florian; Muehlheusser, Gerd; Roider, Andreas - Institute for the Study of Labor (IZA) - 2010

We characterize optimal incentive contracts in a moral hazard framework extended in two directions. First, after effort provision, the agent is free to leave and pursue some ex-post outside option. Second, the value of this outside option is increasing in effort, and hence endogenous. Optimal...

Persistent link: https://www.econbiz.de/10008557227

Hidden Action, Identification, and Organization Design

Schnedler, Wendelin - Institute for the Study of Labor (IZA) - 2010

. What restricts implementability? When does re-organization help to overcome this restriction? This paper shows that any … moral hazard models yields insights into optimal organization design, uncovers the reason why certain organization designs …

Persistent link: https://www.econbiz.de/10008727777

Optimal Family Policy in the Presence of Moral Hazard, When the Quantity and Quality of Children Are Stochastic

Cigno, Alessandro; Luporini, Annalisa - Institute for the Study of Labor (IZA) - 2009

We examine the second-best family policy under the assumption that both the number and the future earning capacities of the children born to a couple are random variables with probability distributions conditional on unobservable parental actions. Potential parents take their decisions without...

Persistent link: https://www.econbiz.de/10005042617

Producer Protection Legislation and Termination Damages in the Presence of Contracting Frictions

Wu, Steven Y. - Institute for the Study of Labor (IZA) - 2009

This study models producer protection legislation that would grant growers the right to claim damages (PPLD) if their contracts are prematurely terminated. In the absence of contracting frictions that prevent contractors from redesigning contracts to accommodate exogenous policy changes, PPLD...

Persistent link: https://www.econbiz.de/10005103260

On the Prudence of Rewarding A While Hoping for B

Schnedler, Wendelin - Institute for the Study of Labor (IZA) - 2003

In multiple-task hidden-action models, the (mis-)allocation of effort may play an important role for benefit creation … associated costs but also by the mis-allocation which they induce. How can mis-allocation be measured? This article presents two … requirements for such a measure (invariance and monotonicity) and analyses whether they are met by proposed measures of mis-allocation …

Persistent link: https://www.econbiz.de/10005761834

A Dynamic Analysis of the Demand for Health Insurance and Health Care

Bolhaar, Jonneke; Lindeboom, Maarten; van der Klaauw, Bas - Institute for the Study of Labor (IZA) - 2008

We investigate the presence of moral hazard and advantageous or adverse selection in a market for supplementary health insurance. For this we specify and estimate dynamic models for health insurance decisions and health care utilization. Estimates of the health care utilization models indicate...

Persistent link: https://www.econbiz.de/10005822176