منابع مشابه
Moral Hazard in Dynamic Risk Management
We consider a contracting problem in which a principal hires an agent to manage a risky project. When the agent chooses volatility components of the output process and the principal observes the output continuously, the principal can compute the quadratic variation of the output, but not the individual components. This leads to moral hazard with respect to the risk choices of the agent. To find...
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A firm is subject to accident risk, which the manager can mitigate by exerting effort. An agency problem arises because effort is unobservable and the manager has limited liability. The occurrence of accidents is modelled as a Poisson process, whose intensity is controlled by the manager. We use martingale techniques to formulate the manager’s incentive compatibility constraints. The optimal co...
متن کاملDynamic Moral Hazard and Stopping
We analyse a simple model of dynamic moral hazard in which there is a clear and tractable trade-off between static and dynamic incentives. In our model, a principal wants an agent to complete a project. The agent undertakes unobservable effort, which affects in each period the probability that the project is completed. We characterise the contracts that the principal sets, with and without comm...
متن کاملMoral Hazard and Risk Management in Agri-Environmental Policy
This paper develops the key finding of Hogan, Ozanne and Colman (2000) that risk aversion among farmers ameliorates the moral hazard problem in relation to agri-environmental policy compliance. It is shown that risk averse farmers who face uncertainty in their production income are more likely to comply with such a policy as a means of risk management. In addition, it is shown that a principal ...
متن کاملAccident Risk, Limited Liability and Dynamic Moral Hazard∗
A firm is subject to accident risk, which the manager can mitigate by exerting effort. An agency problem arises because effort is unobservable and the manager has limited liability. The occurrence of accidents is modelled as a Poisson process, whose intensity is controlled by the manager. We use martingale techniques to formulate the manager’s incentive compatibility constraints and to study th...
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ژورنال
عنوان ژورنال: Management Science
سال: 2017
ISSN: 0025-1909,1526-5501
DOI: 10.1287/mnsc.2016.2493