Contingent Fees, Moral Hazard, and Attorney Rents: A Laboratory Experiment

2007 ◽  
Vol 36 (2) ◽  
pp. 253-273 ◽  
Author(s):  
Michael McKee ◽  
Rudy Santore ◽  
Joel Shelton
Keyword(s):  
Moral Hazard ◽  
Laboratory Experiment ◽  
Contingent Fees

scholarly journals How social preferences provide effort incentives in situations of financial support

PLoS ONE ◽  
2021 ◽  
Vol 16 (1) ◽  
pp. e0244972
Author(s):  
Christian Knoller ◽  
Stefan Neuß ◽  
Richard Peter
Keyword(s):  
Moral Hazard ◽  
Laboratory Experiment ◽  
Strong Evidence ◽  
Financial Support ◽  
Social Preferences ◽  
Monetary Incentives ◽  
Material Efficiency ◽  
Preventive Effort ◽  
Effort Provision ◽  
Level Effect

When people anticipate financial support, they may reduce preventive effort. We conjecture that the source of financial support can mitigate this moral hazard effect due to social preferences. We compare effort choices when another individual voluntarily provides financial support against effort choices under purely monetary incentives. When financial support is provided voluntarily by another individual, we expect recipients to exert more effort to avoid bad outcomes (level effect) and to reduce effort provision to a lesser degree as financial support becomes more generous (sensitivity effect). We conducted an incentivized laboratory experiment and find some evidence for the level effect and strong evidence for the sensitivity effect. This leads to significant gains in material efficiency with expected wealth being 5.5% higher and 37.3% less volatile.

scholarly journals Fees, Reputation, and Information Production in the Credit Rating Industry

2021 ◽  
Vol 13 (2) ◽  
pp. 1-34
Author(s):  
Jacopo Bizzotto ◽  
Adrien Vigier
Keyword(s):  
Social Welfare ◽  
Moral Hazard ◽  
Credit Rating ◽  
Information Production ◽  
Equilibrium Outcome ◽  
Costly Information ◽  
Fee Structure ◽  
Dynamic Incentives ◽  
Contingent Fees ◽  
The Way

We compare a credit rating agency’s incentives to acquire costly information when it is only paid for giving favorable ratings to the corresponding incentives when the agency is paid up-front, i.e., irrespective of the ratings assigned. We show that, in the presence of moral hazard, contingent fees provide stronger dynamic incentives to acquire information than up-front fees and may induce higher social welfare. When the fee structure is chosen by the agency, contingent fees arise as an equilibrium outcome, in line with the way the market for credit rating actually works. (JEL D21, D82, D83, G24)

Susceptibility of Angoff Method to Judgmental Errors: A Laboratory Experiment

2006 ◽  
Author(s):  
Daren S. Protolipac ◽  
Lisa Finkelstein ◽  
John Kulas
Keyword(s):  
Laboratory Experiment ◽  
Angoff Method

AGENCY PROBLEM DALAM PENERAPAN PEMBIAYAAN AKAD MUDHARABAH PADA PERBANKAN SYARIAH

ALQALAM ◽  
2016 ◽  
Vol 33 (1) ◽  
pp. 46
Author(s):  
Aswadi Lubis
Keyword(s):  
High Risk ◽  
Asymmetric Information ◽  
Human Resources ◽  
Moral Hazard ◽  
Adverse Selection ◽  
Agency Problem ◽  
Agency Problems ◽  
Islamic Banking ◽  
The Public

The purpose of writing this article is to describe the agency problems that arise in the application of the financing with mudharabah on Islamic banking. In this article the author describes the use of the theory of financing, asymetri information, agency problems inside of financing. The conclusion of this article is that the financing is asymmetric information problems will arise, both adverse selection and moral hazard. The high risk of prospective managers (mudharib) for their moral hazard and lack of readiness of human resources in Islamic banking is among the factors that make the composition of the distribution of funds to the public more in the form of financing. The limitations that can be done to optimize this financing is among other things; owners of capital supervision (monitoring) and the customers themselves place restrictions on its actions (bonding).

ASPEK ETIK DAN SISTEMIK DALAM EKONOMI DAN BISNIS ISLAM

ALQALAM ◽  
2014 ◽  
Vol 31 (1) ◽  
pp. 187
Author(s):  
Budi Harsanto
Keyword(s):  
Financial Crisis ◽  
Business Ethics ◽  
Moral Hazard ◽  
Global Financial Crisis ◽  
Financial Institution ◽  
Research Question ◽  
Academic Journals ◽  
Lehman Brothers ◽  
The World ◽  
The Global Financial Crisis

The fall of Enron, Lehman Brothers and other major financial institution in the world make researchers conduct various studies about crisis. The research question in this study is, from Islamic economics and business standpoint, why the global financial crisis can happen repeatedly. The purpose is to contribute ideas regarding Islamic viewpoint linked with the global financial crisis. The methodology used is a theoretical-reflective to various article published in academic journals and other intellectual resources with relevant themes. There are lots of analyses on the causes of the crisis. For discussion purposes, the causes divide into two big parts namely ethics and systemic. Ethics contributed to the crisis by greed and moral hazard as a theme that almost always arises in the study of the global financial crisis. Systemic means that the crisis can only be overcome with a major restructuring of the system. Islamic perspective on these two aspect is diametrically different. At ethics side, there is exist direction to obtain blessing in economics and business activities. At systemic side, there is rule of halal and haram and a set of mechanism of economics system such as the concept of ownership that will early prevent the seeds of crisis. Keywords: Islamic economics and business, business ethics, financial crisis 

Moral Hazard and LIBOR

CFA Magazine ◽  
2012 ◽  
Vol 23 (5) ◽  
pp. 20-21
Author(s):  
Osman Ghani
Keyword(s):  
Moral Hazard
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