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Optimal Delegated Search with Adverse Selection and Moral Hazard
Ulbricht, Robert - Volkswirtschaftliche Fakultät, … - 2014
The paper studies a model of delegated search. The distribution of search revenues is unknown to the principal and has to be elicited from the agent in order to design the optimal search policy. At the same time, the search process is unobservable, requiring search to be self-enforcing. The two...
Persistent link: https://www.econbiz.de/10010775066
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Credence Goods, Costly Diagnosis, and Subjective Evaluation
Bester, Helmut; Dahm, Matthias - Volkswirtschaftliche Fakultät, … - 2014
We study contracting between a consumer and an expert. The expert can invest in diagnosis to obtain a noisy signal about whether a low–cost service is sufficient or whether a high–cost treatment is required to solve the consumer’s problem. This involves moral hazard because...
Persistent link: https://www.econbiz.de/10011140964
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Objective versus Subjective Performance Evaluations
Terstiege, Stefan - Volkswirtschaftliche Fakultät, … - 2013
Why does incentive pay often depend on subjective rather than objective performance evaluations? After all, subjective evaluations entail a credibility issue. While the most plausible explanation for this practice is lack of adequate objective measures, I argue that subjective evaluations might...
Persistent link: https://www.econbiz.de/10010700798
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Market Transparency, Adverse Selection, and Moral Hazard
Klein, Tobias J.; Lambertz, Christian; Stahl, Konrad O. - Volkswirtschaftliche Fakultät, … - 2013
We study the effects of improvements in market transparency on eBay on seller exit and continuing sellers’ behavior. An improvement in market transparency by reducing strategic bias in buyer ratings led to a significant increase in buyer valuation especially of sellers rated poorly prior...
Persistent link: https://www.econbiz.de/10011140972
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Modeling Health Insurance Choices in “Competitive” Markets
Keane, Michael - Volkswirtschaftliche Fakultät, … - 2004
This paper describes how state-of-the-art methods of choice modeling can be used to analyze consumer choice behavior in "competitive" health insurance markets. I use the insurance choices of senior citizens in the U.S. as an example. I then consider the issue of whether consumers benefit when we...
Persistent link: https://www.econbiz.de/10011108799
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Contracting under Incomplete Information and Social Preferences: An Experimental Study
Hoppe, Eva I.; Schmitz, Patrick W. - Volkswirtschaftliche Fakultät, … - 2013
cornerstone of contract theory. We have conducted an experiment with 720 participants to explore whether the theoretical insights … are reflected by the behavior of subjects in the laboratory and to what extent deviations from standard theory can be … agency theory is indeed useful to qualitatively predict how variations in the degree of uncertainty affect subjects' behavior …
Persistent link: https://www.econbiz.de/10011110481
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Tournaments with Gaps
Imhof, Lorens; Kräkel, Matthias - Volkswirtschaftliche Fakultät, … - 2013
A standard tournament contract specifies only tournament prizes. If agents’ performance is measured on a cardinal scale, the principal can complement the tournament contract by a gap which defines the minimum distance by which the best performing agent must beat the second best to receive...
Persistent link: https://www.econbiz.de/10011140989
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Public Procurement in Times of Crisis: The Bundling Decision Reconsidered
Schmitz, Patrick W. - Volkswirtschaftliche Fakultät, … - 2013
The government wants two tasks to be performed. In each task, unobservable effort can be exerted by a wealth-constrained private contractor. If the government faces no binding budget constraints, it is optimal to bundle the tasks. The contractor in charge of both tasks then gets a bonus payment...
Persistent link: https://www.econbiz.de/10011107973
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Contingent Profit and Loss Sharing (C-Pls) Contracts
Nabi, Mahmoud Sami - Volkswirtschaftliche Fakultät, … - 2013
This paper analyses the feasibility of profit and loss sharing (PLS) contracts in presence of moral hazard between the principal (financier) and the agent (entrepreneur). It shows that introducing a rule for sharing profits and losses in contingence with the outcome of the entrepreneur’s...
Persistent link: https://www.econbiz.de/10011258370
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Profit Sharing and Debt Contracts in Presence of Moral Hazard
Nabi, Mahmoud Sami - Volkswirtschaftliche Fakultät, … - 2013
This paper compares profit sharing and debt contracts in presence of moral hazard. Its originality relatively to the existing studies consists in performing the comparison between the two contracts in a more general context. Firstly, the internal funds of the agent (entrepreneur) are enabled to...
Persistent link: https://www.econbiz.de/10011112169