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Author: Martin Gaynor Publisher: ISBN: Category : Languages : en Pages :
Book Description
Recent work has shown that, in the presence of moral hazard, balanced budget Nash equilibria in groups are not pareto-optimal. This work shows that when agents misperceive the effects of their actions on the joint outcome, there exist a set of sharing rules which balance the budget and lead to a pareto-optimal Nash equilibria.
Author: Martin Gaynor Publisher: ISBN: Category : Languages : en Pages :
Book Description
Recent work has shown that, in the presence of moral hazard, balanced budget Nash equilibria in groups are not pareto-optimal. This work shows that when agents misperceive the effects of their actions on the joint outcome, there exist a set of sharing rules which balance the budget and lead to a pareto-optimal Nash equilibria.
Author: Martin Gaynor Publisher: ISBN: Category : Incentives in industry Languages : en Pages : 32
Book Description
Recent work has shown that, in the presence of moral hazard, balanced budget Nash equilibria in groups are not pareto-optimal. This work shows that when agents misperceive the effects of their actions on the joint outcome, there exist a set of sharing rules which balance the budget and lead to a pareto-optimal Nash equilibria. Journal of Economic Literature, Classification Numbers: 022, 026, 511.
Author: Christian Biener Publisher: ISBN: Category : Languages : en Pages : 34
Book Description
Incentivizing unobservable effort in risky environments, such as in insurance, credit, and labor markets, is vital as moral hazard may otherwise cause significant welfare losses including the outright failure of markets. Ensuring incentive-compatibility through state-contingent contracts between principal and agent, however, is undesirable for risk-averse agents. We provide theoretical intuition on how pro-social preferences between agents in a joint liability group contract can ensure incentive-compatibility. Two independent large-scale behavioral experiments framed in an insurance context support the hypotheses derived from our theory. In particular, effort decreases when making agents' payoff less state-dependent, but this effect is mitigated with joint liability in a group scheme where agents are additionally motivated by pro-social concerns. Activating strategic motives slightly in-creases effort further; particularly in non-anonymous groups with high network strength. The results suggest that joint liability within groups of pro-social agents is a promising policy to improve efficiency under risk and asymmetric information.
Author: William T. Dickens Publisher: ISBN: Category : Analysis of variance Languages : en Pages : 48
Book Description
When estimating linear models using grouped data researchers typically weight each observation by the group size. Under the assumption that the regression errors for the underlying micro data have expected values of zero, are independent and are homoscedastic, this procedure produces best linear unbiased estimates. This note argues that for most applications in economics the assumption that errors are independent within groups is inappropriate. Since grouping is commonly done on the basis of common observed characteristics, it is inappropriate to assume that there are no unobserved characteristics in common. If group members have unobserved characteristics in common, individual errors will be correlated. If errors are correlated within groups and group sizes are large then heteroscedasticity may be relatively unimportant and weighting by group size may exacerbate heteroscedasticity rather than eliminate it. Two examples presented here suggest that this may be the effect of weighting in most non-experimental applications. In many situations unweighted ordinary least squares may be a preferred alternative. For those cases where it is not, a maximum likelihood and an asymptotically efficient two-step generalized least squares estimator are proposed. An extension of the two-step estimator for grouped binary data is also presented.
Author: Martin Gaynor
Author: Martin Gaynor
Author: Martin Gaynor
Author: Christian Biener
Author: Martin Gaynor
Author: Robert L. Welch
Author: J. Aislinn Bohren
Author: 
Author: United States. Congress. Senate. Committee on Finance
Author: 
Author: William T. Dickens