Improving Trustworthiness in E-Market Using Attack Resilient Reputation Modeling

2014 ◽  
Vol 10 (3) ◽  
pp. 57-82
Author(s):  
Neeraj Kumar Sharma ◽  
Vibha Gaur ◽  
Punam Bedi
Keyword(s):  
Asymmetric Information ◽  
Moral Hazard ◽  
Adverse Selection ◽  
Reputation Systems ◽  
Trust And Reputation ◽  
Reputation Mechanisms ◽  
Reputation Building ◽  
Building Parameters

Asymmetric information is a major problem in e-commerce transactions as it gives rise to adverse selection and moral hazard problems. Reputation mechanisms provide a solution to this problem by discouraging fraudulent behavior and encouraging honest behavior of participants in the uncertain and un-trusted environment of e-market. This paper discusses trust and reputation relationships, and highlights the importance of key reputation building parameters to enhance trustworthiness of participants. Finally, it proposes reputation metrics that guard reputation systems from various attacks by malicious participants to improve the quality of e-market and presents a working prototype.

scholarly journals Dual moral hazard and adverse selection in South African agribusiness: it takes two to tango

2018 ◽  
Vol 21 (3) ◽  
pp. 391-406 ◽  
Author(s):  
Thulasizwe Mkhabela
Keyword(s):  
Asymmetric Information ◽  
Moral Hazard ◽  
South African ◽  
Adverse Selection ◽  
Joint Venture ◽  
Quality Measurement ◽  
Salient Feature ◽  
Retail Price ◽  
Selection Model

The paper employs a dual moral hazard and adverse selection model to analyse partnerships in agribusiness under joint venture contracts with asymmetric information and imperfect quality measurement by the agent and principal both of which contribute to the final quality of the product in terms of production effort and marketing (offtake) effort, respectively. A salient feature of this paper is the analysis of the ramifications of joint venture contract for quantity and quality, which is often deficient in most previous analyses of moral hazard. The research found that contracts that have rewards based on the quantity produced weakened the agent’s incentive to make effort in ensuring quality. This finding could explain why most contracts in agriculture for products with differentiated markets rarely use retail-price conditioned contracts.

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).

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 Asymmetric Information and Islamic Financial Contracts

2018 ◽  
Vol 11 (1) ◽  
pp. 96 ◽  
Author(s):  
Abdelhafid Benamraoui ◽  
Yousef Alwardat
Keyword(s):  
Asymmetric Information ◽  
Moral Hazard ◽  
Adverse Selection ◽  
Comparative Advantage ◽  
Research Paper ◽  
Islamic Finance ◽  
Islamic Banks ◽  
Financial Contracts ◽  
Net Profit ◽  
Conventional Banks

This research paper aims to examine the relevance of asymmetric information to the two main financial contracts used by Islamic banks or conventional banks with Islamic windows, mudaraba and musharaka. We use theoretical proofs to explain how asymmetric information affects mudaraba and musharaka contract in terms of bank cost and yield and how to account for the adverse selection and moral hazard costs when calculating bank net profit or loss. We also provide suggestions supported by key modern theories including signalling, comparative advantage and incentives to resolve asymmetric information problems in the Islamic financial contracts. The research paper shows that asymmetric information is relevant to both mudaraba and musharaka contracts and directly affects Islamic banks and conventional banks with Islamic windows cost and yield. The paper also reveals that signalling and incentives are effective tools to deal with asymmetric information in Islamic financial contracts. Finally, the paper shows that Islamic finance providers need to opt for more secure financing, particularly with small borrowers.

scholarly journals Informal Finance and Asymmetric Information: A theory Review

2017 ◽  
Vol 4 (2) ◽  
pp. 190 ◽  
Author(s):  
Wei Zhao
Keyword(s):  
Asymmetric Information ◽  
Small Business ◽  
Moral Hazard ◽  
Transaction Cost ◽  
Adverse Selection ◽  
Financial Deepening ◽  
Informal Finance ◽  
Formal Finance ◽  
Theory Review ◽  
Objective Necessity

Based on theories of financial inhibition and Transaction Cost Theories, along with the combination of behavior economics, this paper tries to discuss and analyze the nature of informal finance. In china, it is hard to finance for Mid-small business, informal finance has advantage to deal with the capital gap of Mid-small size business as a supplementary means of formal finance which are hard to overcome the problem of adverse selection and moral hazard induced by asymmetric information. we discussed the foundation for existing of informal finance and objective necessity. Based on perspective of asymmetric information, we tried to answer why informal finance still thrived vibrantly on the process of financial deepening.

The Grain Trade

2012 ◽  
Author(s):  
Peter Temin
Keyword(s):  
Asymmetric Information ◽  
Moral Hazard ◽  
Transaction Costs ◽  
Adverse Selection ◽  
The State ◽  
Grain Trade ◽  
Wheat Market ◽  
The Mediterranean

This chapter explores the Mediterranean wheat market. The Romans made many products, from wines to pottery and glass, but wheat was the most widely traded commodity during those times. Shipped from distant provinces, the grain changed hands many times before it reached Rome. This trade was organized by the state and private merchants who did not have the benefit of modern means of transportation or communication, and merchants faced high transaction costs from several sources. The Roman government cleared the Mediterranean of pirates in 67 BCE, reducing greatly one major source of risk for merchants. However, merchants in Rome still had to rely on potentially corrupt agents operating in faraway provinces for months at a time. This arrangement created adverse selection and moral hazard problems from the asymmetric information available to merchants and their agents.

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 Crises and Capital Requirements in Banking

2005 ◽  
Vol 95 (5) ◽  
pp. 1548-1572 ◽  
Author(s):  
Alan D Morrison ◽  
Lucy White
Keyword(s):  
Moral Hazard ◽  
Adverse Selection ◽  
Equilibrium Model ◽  
Success Probability ◽  
Capital Requirements ◽  
Capital Adequacy ◽  
Policy Response ◽  
Ex Post ◽  
Selection Of

We analyze a general equilibrium model in which there is both adverse selection of, and moral hazard by, banks. The regulator can screen banks prior to giving them a licence, audit them ex post to learn the success probability of their projects, and impose capital adequacy requirements. Capital requirements combat moral hazard when the regulator has a strong screening reputation, and they otherwise substitute for screening ability. Crises of confidence can occur only in the latter case, and contrary to conventional wisdom, the appropriate policy response may be to tighten capital requirements to improve the quality of surviving banks.

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>

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