scholarly journals Evaluating Changes to Prevented Planting Provision on Moral Hazard

2019 ◽  
Vol 51 (02) ◽  
pp. 315-327 ◽  
Author(s):  
Christopher N. Boyer ◽  
S. Aaron Smith
Keyword(s):  
Moral Hazard ◽  
Crop Insurance ◽  
Insurance Coverage ◽  
Coverage Factor ◽  
Coverage Level ◽  
Soybean Production ◽  
Ex Post ◽  
Ex Post Moral Hazard ◽  
The Impact

AbstractPrevented planting provision in crop insurance protects producers from failure to plant attributable to natural causes. We determined the impact of this provision at various crop insurance coverage levels on prevented planting claims and ex post moral hazard. The moral hazard incentive in the prevented planting provision is stronger for corn than soybeans. Reducing the prevented planting coverage factor for corn could likely reduce moral hazard, but the degree of the reduction will likely depend on the revenue protection coverage level. Conversely, we found moral hazard is unlikely to occur for soybean production regardless of the revenue protection coverage level.

scholarly journals Study of the ex-post moral hazard of laboratory services in Iran

2021 ◽  
Vol 2 ◽  
pp. 100031
Author(s):  
Seyed Alireza Otobideh ◽  
Hasan Yusefzadeh ◽  
Siamak Aghlmand ◽  
Cyrus Alinia
Keyword(s):  
Moral Hazard ◽  
Laboratory Services ◽  
Ex Post ◽  
Ex Post Moral Hazard

scholarly journals Competitive procurement with ex post moral hazard

2021 ◽  
Author(s):  
Indranil Chakraborty ◽  
Fahad Khalil ◽  
Jacques Lawarree
Keyword(s):  
Moral Hazard ◽  
Ex Post ◽  
Ex Post Moral Hazard

The effects of overconfident yield forecasting on cross-coverage level crop insurance demand

2021 ◽  
Vol ahead-of-print (ahead-of-print) ◽  
Author(s):  
Clayton P. Michaud
Keyword(s):  
Crop Insurance ◽  
Insurance Coverage ◽  
Coverage Level ◽  
Insurance Demand ◽  
Management Tools ◽  
Content Type ◽  
Revenue Insurance ◽  
Yield Risk ◽  
Yield Forecasting ◽  
Yield Insurance

PurposeThis paper examines the effect of overconfident yield forecasting (optimism bias) on crop insurance coverage level choices across both yield and revenue insurance.Design/methodology/approachThis study simulates a representative producer’s preferred coverage level for both yield and revenue insurance under three potential models of decision-making and four potential manifestations of overconfident yield forecasting. The study then uses this framework to examine how coverage level choices change as overconfidence increases (decreases).FindingsAs overconfidence increases, producers prefer lower levels of crop insurance coverage than they would otherwise prefer, with extreme overconfidence inducing farmers to buy no insurance at all. While overconfidence affects cross-coverage demand for revenue and yield insurance similarly, this effect is more pronounced for yield insurance. Cross-coverage level demand for revenue insurance is relatively stable across changes in the correlation between prices and yields.Practical implicationsThis research has important implications for crop insurance subsidy design and crop insurance demand modeling.Originality/valueThere is a growing body of literature suggesting that producers are overconfident with regard to their future yield risk and that this bias reduces their willingness to pay for risk management tools such as crop insurance. This is the first study to look at how such overconfidence affects cross-coverage level demand for crop insurance.

Inter-Firm Connections, Alliance Formation and the Value Created by Alliances

2020 ◽  
Vol 10 (04) ◽  
pp. 2050019
Author(s):  
Yun Liu ◽  
Tomas Mantecon ◽  
Sabatino Dino Silveri ◽  
Wei Sun
Keyword(s):  
Moral Hazard ◽  
Information Asymmetry ◽  
Social Connections ◽  
Opportunistic Behavior ◽  
Alliance Formation ◽  
Board Interlocks ◽  
Valuation Effect ◽  
Ex Post ◽  
The Impact ◽  
Flow Of Information

We investigate the impact of inter-firm connections on alliances. We find that both professional connections and social connections, borne out of board interlocks, employment ties and educational ties, increase the likelihood of alliance formation. In addition, the market reacts more favorably to alliance announcements in the presence of such connections, and this positive valuation effect increases with the degree of information asymmetry between the partner firms. Our findings are consistent with inter-firm connections creating value because they facilitate the flow of information between partner firms, thereby reducing moral hazard concerns and the risk of ex-post opportunistic behavior.

scholarly journals OPTIMAL FINANCIAL AND ORDERING DECISIONS OF A FIRM WITH INSURANCE CONTRACT

2014 ◽  
Vol 21 (2) ◽  
pp. 257-279 ◽  
Author(s):  
Wenli WANG ◽  
Jianwen LUO
Keyword(s):  
Insurance Coverage ◽  
Downside Risk ◽  
Risk Measurement ◽  
Insurance Contract ◽  
Selling Price ◽  
Insurance Policy ◽  
Coverage Level ◽  
Variance Risk ◽  
Loan Limit ◽  
The Impact

This paper examines the impact of a bank’s risk limit on the financial and ordering decisions of a capital-constrained firm with insurance contract. All our major results can be computed via explicit expressions. It is shown that the bank will control its risk to be below the risk limit through setting a loan limit and the firm can make the loan limit increase by buying a deductible insurance policy. It is also shown that the repayment demand level needed to avoid bankruptcy will not be affected by the insurance policy. We derive the firm’s optimal ordering quantity and insurance coverage level under a downside risk measurement and a variance risk measurement separately. It is shown that the firm should pay more attention to whether to buy insurance or not under the downside risk measurement and how much insurance coverage to buy under the variance risk measurement. Under the downside risk measurement, once the firm decides to buy insurance, the optimal coverage level is independent of the bank’s risk limit. We also show that the insurance contract has a more obvious effect on the profit increases when the selling price is high or the bank’s risk limit is low.

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