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Financial Constraints and Moral Hazard : The Case of Franchising
Fan, Ying; Kuhn, Kai-Uwe; Lafontaine, Francine - 2021
Financial constraints are an important impediment to the growth of small businesses. We study theoretically and empirically how the financial constraints of agents affect their decisions to exert effort, and, hence the organizational decisions and growth of principals, in the context of...
Persistent link: https://www.econbiz.de/10013315688
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Student Loans : When is Risk Sharing Desirable?
Eckwert, Bernhard - 2016
In higher education, pure credit market funding leads to underinvestment due to insufficient risk pooling, while pure … credit markets coexist alongside income-contingent loan funding – might restore efficiency of the educational investment … and, under some condition, leads to higher social welfare than pure credit market funding. If combined with a policy that …
Persistent link: https://www.econbiz.de/10012997605
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Long-Term Employment Relations When Agents are Present Biased
Englmaier, Florian - 2016
We analyze how agents' present bias affects optimal contracting in an infinite-horizon employment setting. The principal maximizes profits by offering a menu of contracts to naive agents: a virtual contract - which agents plan to choose in the future - and a real contract which they end up...
Persistent link: https://www.econbiz.de/10012978071
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On the Desirability of Taxing Capital Income to Reduce Moral Hazard in Social Insurance
Jacobs, Bas - 2009
This paper analyzes optimal linear taxes on labor income and savings in a standard two-period life-cycle model with endogenous leisure demands in both periods and non-insurable income risks. Households are subject to skill shocks in both periods of the life-cycle. We allow for completely general...
Persistent link: https://www.econbiz.de/10013155825
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Do Natural Hazards Cause International Migration?
Gröschl, Jasmin - 2016
The estimated amount of people affected by natural hazards stands at a staggering number of about 243 million people per year. While not all of the affected move across borders, international migration potentially provides an adaptation mechanism to natural hazards. The aim of this paper is to...
Persistent link: https://www.econbiz.de/10012978452
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Government Guarantees and Bank Risk Taking Incentives
Fischer, Markus - 2014
guarantees for German Landesbanken which results in lower credit ratings, higher funding costs, and a loss in franchise value …
Persistent link: https://www.econbiz.de/10013055384
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Moral Hazard : Base Models and Two Extensions
Macho-Stadler, Ines - 2016
We analyze the optimal contract in static moral hazard situations, where the agent's effort is not verifiable. We first present the main trade-offs of the principal-agent model. We cover the trade-off of incentives (motivation) vs. risk-sharing (efficiency), incentives vs. rents (when the agent...
Persistent link: https://www.econbiz.de/10012993024
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Should Unemployment Insurance Be Asset-Tested?
Koehne, Sebastian - 2013
We study asset-tested unemployment insurance in an incomplete markets model with moral hazard during job search. Asset testing has two counteracting effects on welfare. On the one hand, it improves consumption insurance by introducing state contingent transfers to agents most in need. On the...
Persistent link: https://www.econbiz.de/10013078913
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Market Transparency, Adverse Selection, and Moral Hazard
Klein, Tobias J. - 2014
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 to the...
Persistent link: https://www.econbiz.de/10013060478
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Second-Degree Moral Hazard in a Real-World Credence Goods Market
Balafoutas, Loukas; Kerschbamer, Rudolf; Sutter, Matthias - 2021
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/10013315697