scholarly journals A Student of Year 12 in Harrow International School Hong Kong

2018 ◽  
Vol 4 (3) ◽  
pp. 260
Author(s):  
Nanqi Zhou
Keyword(s):  
Hong Kong ◽  
Asymmetric Information ◽  
Moral Hazard ◽  
Information Asymmetry ◽  
Adverse Selection ◽  
Financial Market ◽  
International School ◽  
Principal Agent ◽  
Principal Agent Problem ◽  
The Government

<p class="BodyA">George Akerlof introduced the idea that due to asymmetric information between the buyer and the seller in the lemons market, the market for second-hand vehicles will eventually go on the wane. Parallel to this argument, this essay discusses the extent of problem caused by information asymmetry in the financial market, with the most prominent issues being adverse selection, moral hazard and principal agent problem. Yet, with more regulation from the government and the market, some of these problems can be ameliorated, thus reducing the role that asymmetric information plays in the financial market.</p>

Agency, Information, and the Structure of Moral Problems in Business

2006 ◽  
Vol 28 (2) ◽  
pp. 177-195 ◽  
Author(s):  
Bryan W. Husted
Keyword(s):  
Asymmetric Information ◽  
Moral Hazard ◽  
Information Asymmetry ◽  
Adverse Selection ◽  
Information Economics ◽  
Principal Agent ◽  
Ethical Problems ◽  
Agent Model ◽  
Moral Problems ◽  
Principal Agent Model

Many ethical problems in business can be characterized as having elements of incomplete and/or asymmetric information. This paper analyzes such problems using information economics and the principal-agent model. It defines the nature of moral problems in business and then applies principal-agent models involving adverse selection and moral hazard to these problems. Possible solutions to conditions of information asymmetry are examined in order to support the development of organizational virtue.

scholarly journals The Problem of Unilateralism in Agency Theory: Towards a Bilateral Formulation

2017 ◽  
Vol 27 (2) ◽  
pp. 163-182 ◽  
Author(s):  
Sareh Pouryousefi ◽  
Jeff Frooman
Keyword(s):  
Social Interaction ◽  
Asymmetric Information ◽  
Moral Hazard ◽  
Agency Theory ◽  
Adverse Selection ◽  
Principal Agent ◽  
Ethical Behaviour ◽  
Cautionary Tale ◽  
Economic Interactions ◽  
Normative Argument

ABSTRACT:Some business ethicists view agency theory as a cautionary tale—a proof that it is impossible to carry out successful economic interactions in the absence of ethical behaviour. The cautionary-tale view presents a nuanced normative characterisation of agency, but itsunilateralfocus betrays a limited understanding of the structure of social interaction. This article moves beyond unilateralism by presenting a descriptive and normative argument for abilateralcautionary-tale view. Specifically, we discuss hat swaps and role dualism in asymmetric-information principal-agent relationships and argue that the norm of reciprocity can function as a moral solution to agency risks in adverse-selection and moral-hazard problems. Our bilateral cautionary-tale formulation extends the normative boundaries of agency theory, while leaving the fundamental economic assumptions of agency theory intact.

scholarly journals Research on Preventing Moral Hazard of Construction Project Based on Information Asymmetries

2014 ◽  
Vol 8 (1) ◽  
pp. 468-475 ◽  
Author(s):  
Pengcheng Xiang ◽  
Jinan Wang
Keyword(s):  
Moral Hazard ◽  
Information Asymmetry ◽  
Adverse Selection ◽  
Optimization Model ◽  
Construction Project ◽  
Principal Agent ◽  
Information Asymmetries ◽  
Major Objective ◽  
Principal Agent Theory ◽  
Agent Theory

There exists the problem of information asymmetry among the participants in construction project who form economic partnerships one another. Information asymmetries among the participants in construction project places a premium on adverse selection and moral hazard. The major objective of this article is to implement the mechanisms of incentive and monitoring under the framework of principal-agent theory in analysis of moral hazard of construction project and to explore how to prevent it. The optimization model of incentive and monitoring under the circumstance of asymmetric information will be founded on the basis of the analysis of the effect of incentive and monitoring mechanisms in the principal- agent relationship. It indicates that reliability of information can be increased when bringing incentive and monitoring mechanisms into reward contract, which can prevent moral hazard of construction project.

Why Delegate?

Why Delegate? ◽  
2021 ◽  
pp. 1-18
Author(s):  
Neil J. Mitchell
Keyword(s):  
Moral Hazard ◽  
Information Asymmetry ◽  
Adverse Selection ◽  
Real World ◽  
Principal Agent ◽  
Wide Applicability ◽  
Political World ◽  
Everyday Lives ◽  
Political Incentives ◽  
Do So

There is no escaping the delegation relationship, whether in our everyday lives or in the wider economic or political world. This chapter introduces the central concepts that help us understand delegation such as principal, agent, information asymmetry, moral hazard, adverse selection, can’t control and won’t control and the various incentives to delegate. The aims of the book are to develop a broader more descriptively useful logic of delegation that has wide applicability and to do so in an informal and accessible way using real world examples. The book is structured around the variety of economic and political incentives to delegate, stretching from saving time and effort to saving reputation and position and finding someone to blame for wrongdoing.

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).

scholarly journals Contribution of worker participation to increase the efficiency of firms

2004 ◽  
Vol 35 (3) ◽  
pp. 23-29
Author(s):  
P. De Villiers ◽  
G. Kooy
Keyword(s):  
South Africa ◽  
Asymmetric Information ◽  
Principal Agent ◽  
Worker Participation ◽  
Principal Agent Problem ◽  
Conditions Of Employment ◽  
Increase Efficiency

There are many factors that may lead to inefficiencies in a firm. One reason is the existence of a principal-agent problem. Linked with this problem is asymmetric information, unaligned motives of principals and agents, distrust (that was rampant in the era of apartheid in South Africa, but more recently the Basic Conditions of Employment Act can fulfil this role) and conflict. Worker participation schemes can help to alleviate this problem and different forms of worker participation schemes are discussed that can increase efficiency of firms.

Implications of government subsidies for waste cooking oil considering asymmetric information

Kybernetes ◽  
2020 ◽  
Vol ahead-of-print (ahead-of-print) ◽  
Author(s):  
Rui Yang ◽  
Wansheng Tang ◽  
Jianxiong Zhang
Keyword(s):  
Asymmetric Information ◽  
Conversion Rate ◽  
Waste Cooking Oil ◽  
Principal Agent ◽  
High Type ◽  
Content Type ◽  
Cooking Oil ◽  
Incentive Effects ◽  
The Government ◽  
Uncertainty Level

Purpose Without proper treatment, waste cooking oil (WCO) will bring serious environmental and health hazards, which can be effectively alleviated by converting it into biofuel. Subsidies from the government usually play a significant role in encouraging recycling activities and supporting sustainable supply chain. This paper aims to quantitatively investigate the incentive effects of government subsidies under asymmetric information. Design/methodology/approach This paper applies the principal–agent contract to compare the incentive effects of the two widely used subsidy modes (raw material price subsidy [MS] and finished product sale subsidy [FS]) in a management system which consists of the government and a bio-firm where the bio-firm’s conversion rate of the WCO remains as private information. Findings Results indicate that the two subsidy modes have the same performance under symmetric information, while under asymmetric information, the government always prefers the MS mode which is more environment-friendly. Besides, if the average conversion rate is large or the uncertainty level of the asymmetric information is moderate, the MS mode is Pareto-improving compared with the FS mode for the government and the high-type bio-firm. Only when the average conversion rate is small or the uncertainty level is very small/very large, the high-type bio-firm welcomes the FS mode. Originality/value Different from the existing literature, this paper applies the principal–agent contract into the WCO management system and quantitatively compares the two subsidy modes taking the practical problem of asymmetric information into consideration.

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