moral hazard
Recently Published Documents





2022 ◽  
Vol 42 (1) ◽  
pp. 88-104
Ernani Teixeira Torres Filho ◽  
Norberto Montani Martins

RESUMO Este artigo aponta a importância do conceito de “restrição de sobrevivência” proposto por Minsky na gênese da introdução da regulação financeira moderna. O risco de colapsos sistêmicos nos sistemas baseados em moeda fracionários levou os Estados a suspenderem a aplicação da penalidade relacionada à restrição de sobrevivência - a falência - aos bancos comerciais. Essa medida permitiu que esses agentes financeiros pudessem, na busca por lucros, tomar decisões alocativas ainda mais arriscadas, aumentando a fragilização financeira (moral hazard). Para mitigar esse comportamento adverso, a regulação financeira procura todo o tempo estabelecer limites que emulem o comportamento que esses agentes deveriam ter caso ainda estivessem sujeitos à restrição de sobrevivência. Essas regras precisam ser permanentemente revistas de modo a acompanhar a evolução dos mercados financeiros sob pena de se tornarem impotentes para evitar situações de instabilidade financeira.

2022 ◽  
Vol 100 ◽  
pp. 103513
Wai Chung Tse ◽  
Filip Djordjevic ◽  
Viandro Borja ◽  
Louisa Picco ◽  
Tina Lam ◽  

Anton Miglo

AbstractIn this paper, we analyze a firm choice between crowdfunding and bank financing. For many entrepreneurs, it is an important issue. We analyze a model where the choice of financing is affected by moral hazard problem regarding the choice of production scale that favors bank financing, and by the uncertainty about market demand that favors crowdfunding. We argue that long crowdfunding campaigns or campaigns with large targets usually are less efficient in mitigating moral hazard problem than small/short campaigns. We also argue that high-quality firms and firms with potentially large markets will tend to select bank financing while projects with largest amount of investment should select mixed financing where the firm uses a short crowdfunding campaign and a bank loan. Most of our model empirical predictions have not been directly tested so far while they are indirectly consistent with available evidence.

2022 ◽  

Information economics can be best described as a shift in the traditional neoclassical assumption of perfect information. Neoclassical economics assumes that all actors have access to perfect information and are rational in their behavior. Over the years, as scholars have realized that the assumptions of neoclassical economics are not an accurate reflection of the real world, other research streams have developed that relax these assumptions. Information economics is one such stream, arguing that actors or parties have differential access to information, which raises the concern of adverse selection and moral hazard when the actors or parties participate in a transaction. Adverse selection occurs when one party has more information about the product or service than the other party and it leads to a less profitable or riskier transaction for the uninformed party. Alternatively, moral hazard occurs after the transaction, where one party has an incentive to engage in risky behavior when the other party bears the cost of failure. Information economics offers insights to both these concerns and offers solutions in the form of signaling and protection mechanisms. Signaling theory, a component of information economics, addresses how one party can credibly convey information to its potential exchange partners to facilitate transactions. The concepts of information asymmetry and signaling have been widely used in economics and business research to understand concepts ranging from game theoretic models of investments to principal–agent relationships to adverse selection problems in transactions. Information economics offers strong foundations for research within management as it helps understand several phenomena related to organizational transactions. For instance, corporate strategy scholars have utilized the predictions stemming from information economics in acquisition research to study target search, selection, signaling behavior, acquisition contracting, premiums, and governance. Information economics also has broad potential to affect firms’ organizational governance and entry mode choices. The following paragraphs will discuss how this theory has been developed and provide a few applications of information economics in strategy and management research.

2022 ◽  
pp. 1-11
Gilberto Hanssen Androvandi ◽  
Carlos Enrique Carrasco-Gutierrez ◽  
Benjamin Miranda Tabak

2022 ◽  
pp. 987-1001
Charley Tichenor

Using the lines of code (LOC) metric in software project management can be a financial moral hazard to an organization. This is especially true for upper management who handles an organizational budget and strategic plan. Software project managers have their own budgets. However, if they fail to meet the budget, the organization's cash flow, rather than the project manager's personal cash flow, will suffer. This chapter will discuss the practice of software project management, the field of software metrics, game theory, and the game theory issue of moral hazard. It will demonstrate why using LOC as a metric can present a moral hazard to senior management and an organization.

2022 ◽  
Vol 112 (1) ◽  
pp. 267-303
George Georgiadis ◽  
Michael Powell

This paper aims to improve the practical applicability of the classic theory of incentive contracts under moral hazard. We establish conditions under which the information provided by an A/B test of incentive contracts is sufficient for answering the question of how best to improve a status quo incentive contract, given a priori knowledge of the agent’s monetary preferences. We assess the empirical relevance of this result using data from DellaVigna and Pope’s (2018) study of a variety of incentive contracts. Finally, we discuss how our framework can be extended to incorporate additional considerations beyond those in the classic theory. (JEL D82, D86, D91)

2022 ◽  
Vol 28 (1) ◽  
pp. 100182
Leire San-Jose ◽  
Jose Felix Gonzalo ◽  
Maite Ruiz-Roqueñi

Sign in / Sign up

Export Citation Format

Share Document