A Moral Solution to the Moral Hazard Problem

2008 ◽  
Author(s):  
Douglas E. Stevens ◽  
Alex Thevaranjan
Keyword(s):  
Moral Hazard ◽  
Moral Hazard Problem

Monotone Solutions to the Moral Hazard Problem

2018 ◽  
Author(s):  
Hanqing Jin ◽  
Jianming Xia
Keyword(s):  
Moral Hazard ◽  
Moral Hazard Problem ◽  
Monotone Solutions

Modelling the public moral hazard problem of international remittance inflows in Bangladesh

2021 ◽  
Vol 13 (2) ◽  
pp. 166
Author(s):  
Muntasir Murshed ◽  
Syed Rashid Ali ◽  
Mohammad Haseeb ◽  
Solomon Prince Nathaniel
Keyword(s):  
Moral Hazard ◽  
The Public ◽  
Moral Hazard Problem

Overconfidence and Defaulting Dependency in Two-sided Moral Hazard Problem

2013 ◽  
Vol 5 (8) ◽  
pp. 422-428
Author(s):  
Wanglin Kang ◽  
Xinmin Liu ◽  
Xingang Wen
Keyword(s):  
Moral Hazard ◽  
Moral Hazard Problem

Monsters to Destroy

2020 ◽  
Author(s):  
Navin A. Bapat
Keyword(s):  
Moral Hazard ◽  
War On Terror ◽  
Energy Markets ◽  
Economic Security ◽  
Global Markets ◽  
Energy Market ◽  
Reserve Currency ◽  
American Military ◽  
Moral Hazard Problem ◽  
The U.S

This study argues that the war on terror can be explained as an effort to cement the U.S. dollar as the world’s foremost reserve currency by expanding American control over the global energy markets. Since the 1970s, the states of OPEC agreed to denominate their oil sales in U.S. dollars in exchange for American military protection. The 9/11 attacks gave the U.S. cover to eliminate current challengers to this system while simultaneously striking new security agreements with host states throughout the Middle East, Africa, and central Asia that are critical to the extraction, sale, and transportation of energy to global markets. However, the U.S. security guarantee soon created a moral hazard problem. Since the host states had American protection, they were free to engage in corrupt behaviors—while labeling their political opponents as terrorists. To make matters worse, these states had incentives to keep terrorists in their territory, given that doing so would force the U.S. to protect them indefinitely. As a result of this moral hazard problem, terrorists in the host states gradually grew in power and transitioned to insurgencies, which caused a rapid escalation in violence. Facing the increasing cost of securing the host states, the U.S. was forced to scale back its security guarantee, which in turn contributed to greater violence in the energy market. Although the U.S. began the war to maintain its economic dominance, it now finds itself locked into a seemingly permanent war for its economic security.

A moral solution to the moral hazard problem

2010 ◽  
Vol 35 (1) ◽  
pp. 125-139 ◽  
Author(s):  
Douglas E. Stevens ◽  
Alex Thevaranjan
Keyword(s):  
Moral Hazard ◽  
Moral Hazard Problem

A NOTE ON USING EXCESSIVE PERKS TO RESTRAIN THE HIDDEN SAVING PROBLEM

2012 ◽  
Vol 18 (2) ◽  
pp. 480-496 ◽  
Author(s):  
YiLi Chien ◽  
Joon Song
Keyword(s):  
Moral Hazard ◽  
High Profile ◽  
Moral Hazard Problem ◽  
Personal Use ◽  
The Right ◽  
Deviation Problem ◽  
Wage Income

We offer an explanation for why perks are overprovided to high-profile CEOs. Hidden saving by an agent makes it difficult for a principal to control the agent's moral hazard problem. However, an agent typically cannot save perks; for example, a CEO who owns the right to use a private jet for personal use cannot bank the unused airplane hours. Thus, the principal may oversupply the agent perks to avoid the hidden saving problem. When the agent canbothexert lower effortandsave wage income, i.e., in the presence of thedouble deviation problem, we show that the principal supplies more perks than the agent would have purchased on his own (i.e.,excessiveperks).

Do tournaments solve the two-sided moral hazard problem?

1999 ◽  
Vol 40 (3) ◽  
pp. 275-294 ◽  
Author(s):  
Theofanis Tsoulouhas
Keyword(s):  
Moral Hazard ◽  
Moral Hazard Problem

Peer Monitoring, Syndication, and the Dynamics of Venture Capital Interactions: Theory and Evidence

2019 ◽  
Vol 55 (6) ◽  
pp. 1875-1914 ◽  
Author(s):  
Onur Bayar ◽  
Thomas J. Chemmanur ◽  
Xuan Tian
Keyword(s):  
Theoretical Model ◽  
Venture Capital ◽  
Moral Hazard ◽  
Empirical Analysis ◽  
Venture Capitalist ◽  
Value Addition ◽  
Peer Monitoring ◽  
Moral Hazard Problem ◽  
Model Predictions

We develop a theoretical model providing a new rationale for venture capitalist (VC) syndicate formation and empirically test our model predictions. An entrepreneur obtains financing and two different value-adding inputs from a single VC or from two different VCs, each operating in his area of expertise. We characterize the entrepreneur’s equilibrium choice between contracting with a single VC, individually with multiple VCs, or with a VC syndicate. We show that syndicates mitigate VCs’ moral hazard problem in value addition. We also analyze the dynamics of VC syndicate composition. The results of our empirical analysis are consistent with our model’s predictions.

Why Some Persistent Problems Persist

2019 ◽  
Vol 113 (4) ◽  
pp. 980-996
Author(s):  
ROBERT POWELL
Keyword(s):  
Moral Hazard ◽  
Foreign Aid ◽  
Recent Work ◽  
Repeated Games ◽  
Limited Commitment ◽  
Principal Agent ◽  
Enforcement Mechanism ◽  
Moral Hazard Problem ◽  
Incentive Problem

Recent work on counter-insurgency, client states, foreign aid, and proxy wars uses a principal–agent framework to study the principal’s ability to induce an agent to exert effort on the principal’s behalf. This work broadly emphasizes the moral hazard problem and the actors’ limited commitment power. The latter is usually addressed through the logic of repeated games in which reneging on an agreement triggers future punishment. This study analyzes a related incentive problem that undermines the principal’s ability to induce an agent to exert effort on its behalf. The repeated-game’s enforcement mechanism tends to break down if the principal is trying to get the agent to resolve a problem that, if resolved, (i) creates an ongoing problem for the agent and (ii) simultaneously significantly reduces the agent’s ability to impose future costs on the principal. The principal cannot induce the agent to exert much effort in these circumstances, and the problem persists.

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