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The relationship between policyholders and an Islamic insurance (takaful) operator is in essence a principal-agent relationship. This paper analyzes the power of incentives offered to takaful operators in mitigating problems associated with such a relationship. These incentives include wakalah,...
Persistent link: https://www.econbiz.de/10011190128
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).
Persistent link: https://www.econbiz.de/10014024384
This article surveys the literature on principal-agent problems with moral hazard that gained popularity following the seminal works of Mirrlees (1976), Holmström (1979), and others. This literature is concerned with designing incentives to motivate one or more workers—typically by paying for...
Persistent link: https://www.econbiz.de/10014030128
Anecdotal, empirical, and experimental evidence suggests that offering extrinsic rewards for certain activities can reduce people's willingness to engage in those activities voluntarily. We propose a simple rationale for this 'crowding out' phenomenon, using standard economic arguments. The...
Persistent link: https://www.econbiz.de/10010362185
Anecdotal, empirical, and experimental evidence suggests that offering extrinsic rewards for certain activities can reduce people's willingness to engage in those activities voluntarily. We propose a simple rationale for this "crowding out" phenomenon, using standard economic arguments. The...
Persistent link: https://www.econbiz.de/10010345273
Repeated price competition in a duopoly is analyzed when the pricing decision is delegated to managers who are (1) privately informed of the stochastically evolving demand conditions in the industry and (2) are subject to moral-hazard on revenue-enhancing effort. In contrast to the standard...
Persistent link: https://www.econbiz.de/10014191100
A repeated moral hazard setting in which the Principal privately observes the Agent's output is studied. It is shown that there is no loss from restricting the analysis to contracts in which the Agent is supposed to exert effort every period, receives a constant efficiency wage and no feedback...
Persistent link: https://www.econbiz.de/10014061227
This paper discusses the use of informal channels in hiring processes in terms of a standard principal-agent model. We have developed an adverse selection model of the labor market where effort is not contractible and employers have the opportunity to use their group of friends to hire workers....
Persistent link: https://www.econbiz.de/10013090155
We show that on-demand insurance contracts, an innovative form of coverage recently introduced through the InsurTech sector, can serve as a screening device. To this end, we develop a new adverse selection model consistent with Wilson (1977), Miyazaki (1977) and Spence (1978). Consumers have...
Persistent link: https://www.econbiz.de/10012822927
I examine a game-theoretical model of two variants of double-elimination tournaments, and derive the equilibrium behavior of symmetric players and the optimal prize allocation assuming a designer aims to maximize total effort. I compare these theoretical properties to the well-known...
Persistent link: https://www.econbiz.de/10012950756