Download or read book Payment Schemes and Moral Hazard written by James Foust and published by . This book was released on 2013 with total page 36 pages. Available in PDF, EPUB and Kindle. Book excerpt: In a principal-agent relationship, the principal offers a take-it-or-leave-it contract to the agent, who decides to either accept it or not. In game theory terminology, the principal agent relationship is a Stackelberg game in which the principal is the leader, proposing the contract, and the agent is the follower, choosing to accept or reject the proposal. Examples of such relationships are plentiful, such as a principal bank manager hiring an agent employee to work as a teller, a principal land-owner acting hiring an agent farmer to grow crops on her land, or an insurance company offering a home insurance plan to a homeowner. The principal-agent problem concerns how the principal should structure the proposed contract to best incentivize the agent to perform in the way the principal would prefer, taking into account that there are informational asymmetries between the principal and the agent due to the agent having some kind of "private information." Information asymmetries between principal and agent fall into two categories: the agent might have private information about their own characteristics, which gives rise to adverse selection problems; or the agent might have private information about what actions he takes after agreeing to the contract, which gives rise to moral hazard problems. In this paper, I focus on a model with moral hazard. The texts by Kreps and Salanié both offer good expositions of canonical adverse selection and moral hazard problems, which I used as a starting point for this paper. The survey of different extensions of the principal-agent model by Sappington provided a high-level guide to different sub-problems and primary sources. To motivate the model analyzed in this paper, suppose you own several tracts of land that are suitable for agriculture. You want to set up farms on these tracts of land, but you lack the time or expertise to farm the land yourself. You decide, then, to hire several farmers to set up and manage farms on your land. The farmers work year-round and, come harvest time, you pay each of them a sum of money based on their total production. Your challenge is to decide how much money to pay each farmer. Ideally, you would like to be able to pay each worker for the amount of effort that they put in. Unfortunately, you are only able to observe each farmer's output, and there are factors other than the farmer's effort level that affect output. For instance, the amount of rainfall is a random variable that affects all farmers' output equally, but which you are unable to observe. There are also idiosyncratic random variables unique to each farmer that represent the effects of soil condition, pests, and other similar concerns on the tract of land that farmer is working. All else equal, each farmer would prefer to work as little as possible, because they find working displeasurable. As the principal, however, you want the farmers to work as hard as is necessary to maximize your profits. The problem you face is how to structure the farmers' payment scheme so as to align their incentives with your own. The following analysis will compare individual contracts, in which each agent's payment is based only on the realized magnitude of their output, and tournament payment schemes, in which each agent's payment is based only on the ordinal ranking of their realized output relative to that of all other agents'. Much of the model notation as well as the results from Section 5 are an expanded exposition of results from a paper by Green and Stokey. Lazear and Rosen provided helpful intuition for the comparison of contracts and tournaments, and some of the results from earlier sections of the paper are due to Grossman and Hart.
Download or read book Binary Payment Schemes written by Fabian Herweg and published by . This book was released on 2010 with total page 48 pages. Available in PDF, EPUB and Kindle. Book excerpt:
Download or read book Moral Hazard in Health Insurance written by Amy Finkelstein and published by Columbia University Press. This book was released on 2014-12-02 with total page 161 pages. Available in PDF, EPUB and Kindle. Book excerpt: Addressing the challenge of covering heath care expenses—while minimizing economic risks. Moral hazard—the tendency to change behavior when the cost of that behavior will be borne by others—is a particularly tricky question when considering health care. Kenneth J. Arrow’s seminal 1963 paper on this topic (included in this volume) was one of the first to explore the implication of moral hazard for health care, and Amy Finkelstein—recognized as one of the world’s foremost experts on the topic—here examines this issue in the context of contemporary American health care policy. Drawing on research from both the original RAND Health Insurance Experiment and her own research, including a 2008 Health Insurance Experiment in Oregon, Finkelstein presents compelling evidence that health insurance does indeed affect medical spending and encourages policy solutions that acknowledge and account for this. The volume also features commentaries and insights from other renowned economists, including an introduction by Joseph P. Newhouse that provides context for the discussion, a commentary from Jonathan Gruber that considers provider-side moral hazard, and reflections from Joseph E. Stiglitz and Kenneth J. Arrow. “Reads like a fireside chat among a group of distinguished, articulate health economists.” —Choice
Download or read book Co payment Systems in Health Care written by Ed Westerhout and published by . This book was released on 2007 with total page 46 pages. Available in PDF, EPUB and Kindle. Book excerpt:
Download or read book Moral Hazard written by Juan Huitzilihuitl Flores Zendejas and published by Routledge. This book was released on 2021-12 with total page 218 pages. Available in PDF, EPUB and Kindle. Book excerpt: "Moral Hazard is a core concept in economics. In a nutshell, moral hazard reflects the reduced incentive to protect against risk where an entity is (or believes it will be) protected from its consequences, whether through an insurance arrangement or an implicit or explicit guarantee system. It is fundamentally driven by information asymmetry, arises in all sectors of the economy, including banking, medical insurance, financial insurance, and governmental support, undermines the stability of our economic systems and has burdened taxpayers in all developed countries, resulting in significant costs to the community. Despite the seriousness and pervasiveness of moral hazard, policymakers and scholars have failed to address this issue. This book fills this gap. It covers 200 years of moral hazard: from its origins in the 19th century to the bailouts announced in the aftermath of the COVID-19 outbreak. The book is divided into three parts. Part I deals with the ethics and other fundamental issues connected to moral hazard. Part II provides historical and empirical evidence on moral hazard in international finance. It examines in turn the role of the export credit industry, the international lender of last resort, and the IMF. Finally, Part III examines specific sectors such as automobile, banking, and the US industry at large. This is the first book to provide an interdisciplinary analysis of moral hazard and explain why addressing this issue has become crucial today. As such, it will attract interest from scholars across different fields, including economists, political scientists and lawyers"--
Download or read book Moral Hazard Effects in Health Insurance written by Olesya Kazantseva and published by GRIN Verlag. This book was released on 2014-07-18 with total page 20 pages. Available in PDF, EPUB and Kindle. Book excerpt: Seminar paper from the year 2014 in the subject Business economics - Economic Policy, grade: 1,3, University of Kassel, language: English, abstract: Within the discussion about the increasing expenditures in health insurance, the overutilization of medical care is often attributed to the existence of a moral hazard problem. Since moral hazard has a great impact on health insurance policies, there is a growing interest in the economic literature to identify and to measure its effects. Although the problem of overconsumption of medical care does not mean moral hazard per se, the determination of the latter may reduce its scope and help to mitigate the problem of overutilization. The main objective of this paper is an empirical evidence of the moral hazard phenomenon. By analysing the economic literature on moral hazard in health insurance this paper seeks for examples of its empirical evidence, whereby the emphasis lies on distinguishing between the demand-oriented (especially ex-post) and the supply-oriented (external) moral hazard.
Download or read book Allocation Information and Markets written by John Eatwell and published by Springer. This book was released on 1989-09-21 with total page 321 pages. Available in PDF, EPUB and Kindle. Book excerpt: This is an extract from the 4-volume dictionary of economics, a reference book which aims to define the subject of economics today. 1300 subject entries in the complete work cover the broad themes of economic theory. This volume concentrates on the topic of allocation information and markets.
Download or read book Hospital Response to Reimbursement Incentives written by Boyd H. Gilman and published by . This book was released on 1998 with total page 456 pages. Available in PDF, EPUB and Kindle. Book excerpt:
Download or read book A Note on Moral Hazard and Linear Compensation Schemes written by Xiao Yu Wang and published by . This book was released on 2013 with total page pages. Available in PDF, EPUB and Kindle. Book excerpt:
Download or read book Agency Theory Information and Incentives written by Günter Bamberg and published by Springer Science & Business Media. This book was released on 2012-12-06 with total page 538 pages. Available in PDF, EPUB and Kindle. Book excerpt: Agency Theory is a new branch of economics which focusses on the roles of information and of incentives when individuals cooperate with respect to the utilisation of resources. Basic approaches are coming from microeco nomic theory as well as from risk analysis. Among the broad variety of ap plications are: the many designs of contractual arrangements, organiza tions, and institutions as well as the manifold aspects of the separation of ownership and control so fundamental for business finance. After some twenty years of intensive research in the field of information economics it might be timely to present the most basic issues, questions, models, and applications. This volume Agency Theory, Information, and Incentives offers introductory surveys as well as results of individual rese arch that seem to shape that field of information economics appropriately. Some 30 authors were invited to present their subjects in such a way that students could easily become acquainted with the main ideas of informa tion economics. So the aim of Agency Theory, Information, and Incentives is to introduce students at an intermediate level and to accompany their work in classes on microeconomics, information economics, organization, management theory, and business finance. The topics selected form the eight sections of the book: 1. Agency Theory and Risk Sharing 2. Information and Incentives 3. Capital Markets and Moral Hazard 4. Financial Contracting and Dividends 5. External Accounting and Auditing 6. Coordination in Groups 7. Property Rights and Fairness 8. Agency Costs.
Download or read book On the Desing of Incentive Schemes Under Moral Hazard and Adverse Selection written by and published by . This book was released on 1985 with total page 39 pages. Available in PDF, EPUB and Kindle. Book excerpt:
Download or read book On the Design of Incentive Schemes Under Moral Hazard and Adverse Selection written by Pierre Picard and published by . This book was released on 1985 with total page 39 pages. Available in PDF, EPUB and Kindle. Book excerpt:
Download or read book Oversight Issues in Mobile Payments written by Tanai Khiaonarong and published by International Monetary Fund. This book was released on 2014-07-15 with total page 35 pages. Available in PDF, EPUB and Kindle. Book excerpt: This paper examines oversight issues that underlie the potential growth and risks in mobile payments. International experience suggests that financial authorities can develop effective oversight frameworks for new payment methods to safeguard public confidence and financial stability by establishing: (i) a clear legal regime; (ii) proportionate AML/CFT measures to prevent financial integrity risks; (iii) fund safeguarding measures such as insurance, similar guarantee schemes, or “pass through” deposit insurance; (iv) contingency plans for operational disruptions; and (v) risk controls and access criteria in payment systems. Such measures are particularly important for low-income countries where diffusion is becoming more widespread.
Download or read book Securities Clearance and Settlement Systems written by Mario Guadamillas and published by World Bank Publications. This book was released on 2001 with total page 44 pages. Available in PDF, EPUB and Kindle. Book excerpt: How to assess securities clearance and settlement systems, based on international standards and best practices.
Download or read book Risk Selection and Optimal Health Insurance Provider Payment Systems written by Karen Eggleston and published by . This book was released on 2000 with total page 0 pages. Available in PDF, EPUB and Kindle. Book excerpt: This article presents a model of the important health-policy dilemmas of risk selection and moral hazard. When providers can increase revenues by selecting favorable risks, capitation or purely prospective payment is unlikely to be optimal. A second best payment system may involve mixed levels of both demand- and supply-side cost sharing: consumers may prefer to pay deductibles and co-payments rather than to have their healthcare providers receive large financial rewards for skimping on care or discriminating against expensive-to-treat patients. Risk adjustment can improve the terms of the social trade-off between inefficient utilization and inequitable coverage. The role of professional ethics is also considered.
Download or read book Designing optimal environmental incentive schemes under moral hazard and private information written by Jon Vislie and published by . This book was released on 1995 with total page 20 pages. Available in PDF, EPUB and Kindle. Book excerpt:
Download or read book Asymmetric Information and the Market Structure of the Banking Industry written by Mr.Giovanni Dell'Ariccia and published by International Monetary Fund. This book was released on 1998-06-01 with total page 32 pages. Available in PDF, EPUB and Kindle. Book excerpt: The paper analyzes the effects of informational asymmetries on the market structure of the banking industry in a multi-period model of spatial competition. All lenders face uncertainty with regard to borrowers’ creditworthiness, but, in the process of lending, incumbent banks gather proprietary information about their clients, acquiring an advantage over potential entrants. These informational asymmetries are an important determinant of the industry structure and may represent a barrier to entry for new banks. The paper shows that, in contrast with traditional models of horizontal differentiation, the steady-state equilibrium is characterized by a finite number of banks even in the absence of fixed costs.
