We introduce uncertainty into Holmstrom and Milgrom (1987) to study optimal long-term contracting with learning. In a dynamic relationship, the agent's shirking not only reduces current performance but also increases the agent's information rent due to the persistent belief manipulation effect....

Various approaches used in Agent-based Computational Economics (ACE) to model endogenously determined interactions between agents are discussed. This concerns models in which agents not only (learn how to) play some (market or other) game, but also (learn to) decide with whom to do that (or not).

In this paper we show how imperfect memory can imply a preference for increasing payments. We model an agent making a decision regarding effort in two periods where the cost of effort is imperfectly known. Before making the first decision, the agent receives a signal related to the cost of...

During the last decade several empirical studies have stressed the importance of norms and social interactions for explaining sickness absence behavior. In this context public discussions about the intentions of the insurance, and of the rights and duties of the receivers, may be important for...

Sick workers in many countries receive sick pay during their illness- related absences from the workplace. In several countries, the social security system insures firms against their workers' sickness absences. However, this insurance may create moral hazard problems for firms, leading to the...

The paper evaluates the German health care reform of 1997, using the individual number of doctor visits as outcome measure and data from the German Socio- Economic Panel for the years 1995-1999. A number of modified count data models allow to estimate the effect of the reform in different parts...

Under certain conditions the optimal insurance policy will offer full coverage above a deductible, as Arrow and others have shown long time ago. Interestingly, the same design of insurance policies applies in case of a single loss and ex-ante moral hazard. However, many insurance policies...

This paper studies interrelations between two benefits in the Swedish social insurance system: the sickness insurance and the temporary parental benefit. The level of compensation differs between the two benefits creating an economic incentive for parents to claim temporary parental benefit when...

One of the main features of health insurance is moral hazard, as defined by Pauly (1968); people face incentives for excess utilization of medical care since they do not pay the full marginal cost for provision. To mitigate the moral hazard problem, a coinsurance can be included in the insurance...

Social insurance programs typically comprise sick leave insurance. An important policy parameter is how the cost of sick leave are shared between workers, firms, and the social security system. We show that this sharing rule affects not only absence behavior, but also workers' subsequent health....