The aim of the paper is to set the agency problem into a broad context of New Institutional Economics with an emphasis on historical connections. In the first section, I explain the historical evolution of basic theoretical concepts like the theory of firm, the theory of market process and the...

Im klassischen Modell von Diamond und Dybvig (1983) werden Bank-runs durch sich selbst erfüllende pessimistische Erwartungen der Anleger provoziert. Sie sind damit ein Sonnenflecken-Phänomen. Die spekulativen Runs können u.a. durch eine Einlagenversicherung vermieden werden. Allerdings...

The working paper presents a comprehensive overview of the principal-agent model that emphasizes the role of trust in the agency relationship. The analysis demonstrates that the legal remedy for breach of duty can result in a full-information efficient outcome eliminating both moral hazard and...

We study a combinatorial variant of the classical principal-agent model. In our setting a principal wishes to incentivize a team of strategic agents to exert costly effort on his behalf. Agentsʼ actions are hidden and the principal observes only the outcome of the team, which depends...

When Insurers Go Bust applies agency theory and the theories of adverse selection and moral hazard as the motivation for prudential regulation of insurance. The resulting scheme has strong flavors of verifiability, simplicity, consistency, and transparency. In consequence, ruin theory does not...

We consider a model in which the principal-agent relation between inside shareholders and the management affects the firm value.We study the effect of financing the project with risky debt in changing the incentive for a risk-neutral shareholder (the principal) to implement the project-value...

Moral hazard played an influential role in the shape of the post-crisis policy debate on the role and limits of optimal financial regulation as a means of constraining excessive risktaking socially. At the same time, however, our understanding of moral hazard - potential sources, its impact on...

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...