Download or read book Adverse Selection and Moral Hazard in Contract Law written by Nicole Petrick and published by GRIN Verlag. This book was released on 2009 with total page 25 pages. Available in PDF, EPUB and Kindle. Book excerpt: Essay aus dem Jahr 2005 im Fachbereich BWL - Recht, Note: 1,7, Higher School of Economics Moscow, Russia, Sprache: Deutsch, Abstract: Legal and economical interpretations of contract, contract law and contract theory, asymmetric information, adverse selection and moral hazard. Paper explains negative effects of adverse selection and moral hazard for the case of transaction costs and incomplete contracts and describes incentives to avoid adverse selection and moral hazard, such as signaling and deductibles as well as indemnity contracts and valued contracts.
Download or read book Optimal Contract and Organizational Design Under Moral Hazard and Adverse Selection written by Bernd Theilen and published by . This book was released on 1996 with total page 179 pages. Available in PDF, EPUB and Kindle. Book excerpt:
Download or read book Optimal Contracts Under Moral Hazard and Adverse Selection written by Jaeyoung Sung and published by . This book was released on 2008 with total page 51 pages. Available in PDF, EPUB and Kindle. Book excerpt: In spite of the importance of optimal contracting problems under moral hazard and adverse selection, current literature offers no optimal solutions to contracting problems under moral hazard and adverse selection with risk averse agents. The agent's risk aversion, however, appears to be critical for understanding managerial compensation problems. We present a continuous-time agency model with a risk-averse agent and a risk-neutral principal to show that moral hazard and adverse selection can be optimally resolved with a menu of linear contracts. In application, we discuss a few managerial compensation problems involving managerial project selection and capital budgeting decisions, and show that a flat-wage contract is sometimes optimal.
Download or read book Optimal Contracts Under Adverse Selection and Moral Hazard written by and published by . This book was released on 2010 with total page pages. Available in PDF, EPUB and Kindle. Book excerpt: This article presents a continuous-time agency model in the presence of adverse selection and moral hazard with a risk-averse agent and a risk-neutral principal. Under the model setup, we show that the optimal controls are constant over time, and thus the optimal menu consists of contracts that are linear in the final outcome. We also show that when a moral hazard problem adds to an adverse selection problem, the monotonicity condition well known in the pure adverse selection literature needs to be modified to ensure the incentive compatibility for information revelation. The model is applied to a few managerial compensation problems involving managerial project selection and capital budgeting decisions. We argue that in the third-best world, the relationship between the volatility of the outcome and the sensitivity of the contract depends on interactions between the managerial cost and the firm`s production functions. Contrary to conventional wisdom, sometimes the higher the volatility, the higher the sensitivity of the contract. The firm receiving good news sometimes chooses safer projects or invests less than it does with bad news. We also examine the effects of the observability of the volatility on corporate investment decisions.
Download or read book The Economics of Contracts second edition written by Bernard Salanie and published by MIT Press. This book was released on 2017-02-17 with total page 257 pages. Available in PDF, EPUB and Kindle. Book excerpt: A concise introduction to the theory of contracts, emphasizing basic tools that allow the reader to understand the main theoretical models; revised and updated throughout for this edition. The theory of contracts grew out of the failure of the general equilibrium model to account for the strategic interactions among agents that arise from informational asymmetries. This popular text, revised and updated throughout for the second edition, serves as a concise and rigorous introduction to the theory of contracts for graduate students and professional economists. The book presents the main models of the theory of contracts, particularly the basic models of adverse selection, signaling, and moral hazard. It emphasizes the methods used to analyze the models, but also includes brief introductions to many of the applications in different fields of economics. The goal is to give readers the tools to understand the basic models and create their own. For the second edition, major changes have been made to chapter 3, on examples and extensions for the adverse selection model, which now includes more thorough discussions of multiprincipals, collusion, and multidimensional adverse selection, and to chapter 5, on moral hazard, with the limited liability model, career concerns, and common agency added to its topics. Two chapters have been completely rewritten: chapter 7, on the theory of incomplete contracts, and chapter 8, on the empirical literature in the theory of contracts. An appendix presents concepts of noncooperative game theory to supplement chapters 4 and 6. Exercises follow chapters 2 through 5. Praise for the previous edition: “The Economics of Contracts offers an excellent introduction to agency models. Written by one of the leading young researchers in contact theory, it is rigorous, clear, concise, and up-to-date. Researchers and students who want to learn about the economics of incentives will want to read this primer.”—Jean Tirole, Institut D'Économie Industrielle, Universite des Sciences Sociales, France “Students will find this a very useful introduction to the ideas of contract theory. Salanié has managed to summarize a large amount of material in a relatively short number of pages in a highly accessible and readable manner.”—Oliver Hart, Professor of Economics, Harvard University
Download or read book Dynamic Contracts with Moral Hazard and Adverse Selection written by Alex Gershkov and published by . This book was released on 2011 with total page pages. Available in PDF, EPUB and Kindle. Book excerpt:
Download or read book Optimal Contracts Under Adverse Selection Moral Hazard and Type Dependent Reservation Utilities written by Natalie Packham and published by . This book was released on 2015 with total page 7 pages. Available in PDF, EPUB and Kindle. Book excerpt: In a continuous-time setting where a risk-averse agent controls the drift of an output process driven by a Brownian motion, optimal contracts are linear in the terminal output; this result is well-known in a setting with moral hazard and - under stronger assumptions - adverse selection. Using techniques from stochastic control theory, we show that this result continues to hold when in addition reservation utilities are type-dependent. This type of problem occurs in the study of optimal compensation problems involving competing principals.
Download or read book Moral Hazard and Non exclusive Contracts written by Alberto Bisin and published by . This book was released on 1998 with total page 44 pages. Available in PDF, EPUB and Kindle. Book excerpt:
Download or read book Contract Theory written by Patrick Bolton and published by MIT Press. This book was released on 2004-12-10 with total page 746 pages. Available in PDF, EPUB and Kindle. Book excerpt: A comprehensive introduction to contract theory, emphasizing common themes and methodologies as well as applications in key areas. Despite the vast research literature on topics relating to contract theory, only a few of the field's core ideas are covered in microeconomics textbooks. This long-awaited book fills the need for a comprehensive textbook on contract theory suitable for use at the graduate and advanced undergraduate levels. It covers the areas of agency theory, information economics, and organization theory, highlighting common themes and methodologies and presenting the main ideas in an accessible way. It also presents many applications in all areas of economics, especially labor economics, industrial organization, and corporate finance. The book emphasizes applications rather than general theorems while providing self-contained, intuitive treatment of the simple models analyzed. In this way, it can also serve as a reference for researchers interested in building contract-theoretic models in applied contexts.The book covers all the major topics in contract theory taught in most graduate courses. It begins by discussing such basic ideas in incentive and information theory as screening, signaling, and moral hazard. Subsequent sections treat multilateral contracting with private information or hidden actions, covering auction theory, bilateral trade under private information, and the theory of the internal organization of firms; long-term contracts with private information or hidden actions; and incomplete contracts, the theory of ownership and control, and contracting with externalities. Each chapter ends with a guide to the relevant literature. Exercises appear in a separate chapter at the end of the book.
Download or read book Simple Contracts with Adverse Selection and Moral Hazard written by Daniel Gottlieb and published by . This book was released on 2015 with total page 0 pages. Available in PDF, EPUB and Kindle. Book excerpt: We study a principal-agent model with both moral hazard and adverse selection. Risk-neutral agents with limited liability have arbitrary private information about the distribution of outputs and the cost of effort. We obtain conditions under which the optimal mechanism offers a single contract to all types. These conditions are always satisfied, for example, if output is binary or if the distribution of outputs is multiplicatively separable and ordered by FOSD (if it is not ordered, the optimal mechanism offers at most two contracts). If, in addition, the marginal distribution satisfies the monotone likelihood ratio property, this single contract is a debt contract. Our model suggests that offering a single contract may be optimal in environments with adverse selection and moral hazard, where offering flexible menus of contracts provides gaming opportunities to the agent.
Download or read book Optimal Tenurial Contracts Under Both Moral Hazard and Adverse Selection written by Christian At and published by . This book was released on 2020 with total page 0 pages. Available in PDF, EPUB and Kindle. Book excerpt: This paper determines the optimal tenurial contract between a monopoly landlord and a tenant protected by limited liability under both adverse selection (based on the tenant's ability) and moral hazard (based on the tenant's choice of effort). We identify different optimal contracts depending on the tenant's outside option. For intermediate values, there is a threshold of tenant ability depending on the outside option level below which the optimal contract is a separating sharecropping contract, and a pooling one otherwise. We also find that an increase in the outside option does not monotonically increase the tenant's optimal effort.
Download or read book Readings in the Economics of Contract Law written by Victor P. Goldberg and published by Cambridge University Press. This book was released on 1989 with total page 270 pages. Available in PDF, EPUB and Kindle. Book excerpt: This collection brings together some of the main contributions to an important area of this work, the economics of contract law.
Download or read book Contract Economics written by T.V.S.Ramamohan Rao and published by New Age International. This book was released on 2004 with total page 370 pages. Available in PDF, EPUB and Kindle. Book excerpt: Contracts Are A Major Organizational Arrangement To Conduct Transactions. Economic Theory Has Been Making Attempts To Come To Grips With Four Pertinent Issues. Why Is Contracting Superior To Imperfect Markets And Hierarchical Control In Decentralized Organizations? What Basic Institutional Mechanisms Should Be In Place To Ensure Efficiency Of Contracts? What Determines The Choice Of Contract Forms (In Particular, The Behavioral Responses Of Self-Interest Seeking To Reactions Of Others) And Contract Parameters?Can Contracts Provide A Better Alternative To Regulated Markets? Keeping Information Asymmetry And Asset Specificity As The Focal Points This Book Deals With The Following Mechanisms Of Exchange-Markets (Including Transfer Prices), Contingent Claims Contracts, Incomplete And Incentive Contracts, And Implicit Contracts.The Emphasis Is On The Efficient Structuring Of Such Contracts And The Choice Of Suitable Contract Parameters. One Chapter Is Also Devoted To Trust And Informal Dimensions Of Contracts Since It Is Recognized That Defining And Enforcing Formal Contracts Becomes Difficult As Information Asymmetry And Asset Specificity Reach Their Limits. The Level Of Algebraic Complexity In The Derivations Is Kept To A Minimum To Make The Book Accessible To A Wide Audience.
Download or read book Optimal Contracts with Lock in written by Joseph Farrell and published by . This book was released on 1987 with total page 56 pages. Available in PDF, EPUB and Kindle. Book excerpt:
Download or read book Optimal Debt Contracts and Moral Hazard Along the Business Cycle written by Pietro Reichlin and published by . This book was released on 2000 with total page 56 pages. Available in PDF, EPUB and Kindle. Book excerpt:
Download or read book Simple Efficient Rank order Contracts Under Moral Hazard and Adverse Selection written by Jungyoll Yun and published by . This book was released on 1990 with total page 41 pages. Available in PDF, EPUB and Kindle. Book excerpt:
Download or read book Contract Theory written by Fouad Sabry and published by One Billion Knowledgeable. This book was released on 2023-12-15 with total page 324 pages. Available in PDF, EPUB and Kindle. Book excerpt: What is Contract Theory A contract is an institutional arrangement for the movement of resources, which defines the various connections between the parties to a transaction or limits the rights and obligations of the parties. From a legal perspective, a contract is an arrangement that makes it possible for resources to flow differently. How you will benefit (I) Insights, and validations about the following topics: Chapter 1: Contract theory Chapter 2: Index of economics articles Chapter 3: Moral hazard Chapter 4: The Market for Lemons Chapter 5: Complete contract Chapter 6: Adverse selection Chapter 7: Information asymmetry Chapter 8: Coase theorem Chapter 9: Incentive Chapter 10: Mechanism design Chapter 11: Principal-agent problem Chapter 12: Efficiency wage Chapter 13: Theory of the firm Chapter 14: Information economics Chapter 15: Personnel economics Chapter 16: Agency cost Chapter 17: Signalling (economics) Chapter 18: Single-crossing condition Chapter 19: Screening (economics) Chapter 20: Incomplete contracts Chapter 21: Multiple principal problem (II) Answering the public top questions about contract theory. (III) Real world examples for the usage of contract theory in many fields. (IV) Rich glossary featuring over 1200 terms to unlock a comprehensive understanding of contract theory. (eBook only). Who will benefit Professionals, undergraduate and graduate students, enthusiasts, hobbyists, and those who want to go beyond basic knowledge or information for any kind of contract theory.
