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that hardly explains the many features of an insurance contract. We extend this setup to include the situation that the … show how the law of insurance contracts should allow insurers to incentivize policyholders to exert an adequate level of …
Persistent link: https://www.econbiz.de/10011723471
High correlations between risks can increase required insurer capital and/orreduce the availability of insurance. For … such insurance lines, securitizationis rapidly emerging as an alternative form of risk transfer. The ultimatesuccess of … to facilitateand/or be facilitated by insurance contracts. We consider how insuredlosses might be decomposed into …
Persistent link: https://www.econbiz.de/10011400246
This paper proposes a simple partial equilibrium model to investigate the effects of government policy on venture capital backed investments. Giving up an alternative career, entrepreneurs focus their effort on a single, high risk venture each. Venture capitalists acquire an equity stake and...
Persistent link: https://www.econbiz.de/10011398877
We formalize the idea that a financial conglomerate may utilize commercial banking activities to cross-subsidize investment banking through bundled offers. The investment banking sector entails supra-normal profits due to incentive problems with security underwriting. Universal banks may aim to...
Persistent link: https://www.econbiz.de/10011342362
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/10010227243
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/10010199693
A central question for pension design is how benefits should vary with the age of retirement beyond early eligibility age. It is often argued that in order to be neutral with respect to individual retirement decisions benefits should be actuarially fair, that is, the present value of additional...
Persistent link: https://www.econbiz.de/10011506463
We propose a model based on competitive markets in order to analyse an economy with several principals and agents. We model the principal-agent economy as a two-sided matching game and characterise the set of stable outcomes of this principal-agent matching market. A simple mechanism to...
Persistent link: https://www.econbiz.de/10011507906
Student loans, even income-contingent ones, are not optimal. Potential university students with the appropriate characteristics should be offered a scholarship, dependent on both need and merit. The award of the scholarship should be conditional on the choice of university degree, but students...
Persistent link: https://www.econbiz.de/10011508011
The issue of whether unemployment benefits should increase or decrease over the unemployment spell is analyzed in an analytically tractable model allowing moral hazard, adverse selection and hidden savings. Analytical results show that when the search productivity of unemployed is constant over...
Persistent link: https://www.econbiz.de/10011513998