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Insurance for Catastrophes - Indemnity vs. Parametric Insurance with Imperfect Information
Feess, Eberhard; Jordan, Cathrin; Noy, Ilan - 2022
Insurance for natural hazards - earthquakes, hurricanes, or pandemics - is rarely comprehensively adopted without …. Efforts to close this insurance gap include the introduction of parametric (index) insurance products for various catastrophic … risks. We compare parametric to indemnity insurance in a simple model where the insurance company has superior information …
Persistent link: https://www.econbiz.de/10013296268
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Learning from Failures : Optimal Contract for Experimentation and Production
Khalil, Fahad - 2019
Before embarking on a project, a principal must often rely on an agent to learn about its profitability. We model this learning as a two-armed bandit problem and highlight the interaction between learning (experimentation) and production. We derive the optimal contract for both experimentation...
Persistent link: https://www.econbiz.de/10012892041
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Trust and Contracts : Empirical Evidence
D'Acunto, Francesco; Xie, Jin; Yao, Jiaquan - 2021
Trust between parties should drive the negotiation and design of contract: if parties did not trust each others' reaction to unplanned events, they might agree to pay higher costs of negotiation to complete contracts. Using a unique sample of U.S. principal-agent consulting contracts and a...
Persistent link: https://www.econbiz.de/10013314897
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Psychological and Social Motivations in Microfinance Contracts : Theory and Evidence
Dhami, Sanjit - 2020
Microfinance contracts have enormous economic and welfare significance. We study, theoretically and empirically, the problem of effort choice under individual liability (IL) and joint liability (JL) contracts when loan repayments are made either privately, or publicly in front of one's social...
Persistent link: https://www.econbiz.de/10012848321
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Stochastic Contracts and Subjective Evaluations
Lang, Matthias - 2021
Subjective evaluations are widely used, but call for different contracts from traditional moral-hazard settings. Previous literature shows that contracts require payments to third parties, which real-world contracts rarely use. I show that the implicit assumption of deterministic contracts makes...
Persistent link: https://www.econbiz.de/10013311715
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Remittances, banking status and the usage of insurance schemes
Crayen, Dorothee; Hainz, Christa; Ströh de Martínez, … - 2010
can be used to self-insure, substituting for both formal and informal insurance. We investigate this question using a … remittances, which supports the idea that remittances act as (self-) insurance. We also show that purchasing formal funeral cover … is influenced by other risk management strategies and that determinants of informal insurance differ from those of formal …
Persistent link: https://www.econbiz.de/10010270469
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Insuring Peace : Index-Based Livestock Insurance, Droughts, and Conflict
Gehring, Kai; Schaudt, Paul - 2023
, and climate change is predicted to intensify this problem. The Index-Based Livestock Insurance (IBLI) scheme piloted in …
Persistent link: https://www.econbiz.de/10014356486
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Reputations, relationships and the enforcement of incomplete contracts
MacLeod, W. Bentley - 2006
This paper discusses the literature on the enforcement of incomplete contracts. It compares legal enforcement to enforcement via relationships and reputations. A number of mechanisms, such as the repeat purchase mechanism (Klein and Leffler (1981)) and efficiency wages (Shapiro and Stiglitz...
Persistent link: https://www.econbiz.de/10010263921
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Towards a theory of trade finance
Schmidt-Eisenlohr, Tim - 2011
Shipping goods internationally is risky and takes time. To allocate risk and to finance the time gap between production and sale, a range of payment contracts is utilized. I study the optimal choice between these payment contracts considering one shot transactions, repeated transactions and...
Persistent link: https://www.econbiz.de/10010274926
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Formal contracts, relational contracts, and the threat-point effect
Itoh, Hideshi; Morita, Hodaka - 2011
Can formal contracts help resolving the holdup problem? We address this important question by studying the holdup problem in repeated transactions between a seller and a buyer in which the seller can make relation-specific investments in each period. In contrast to previous findings, we...
Persistent link: https://www.econbiz.de/10010277359