Social insurance, incentives and risk taking

CEO Risk-Taking Incentives based on Environmental Sustainability

In this study, I try to examine the effect of environmental sustainability on CEO risk taking. Prior research, however, has struggled to establish this relation empirically; moreover, some evidence points to the possibility that the CEO risk appetite is lower for firms with sustainable environment. The opportunistic approach of managers leads to decisions about personal interests and imposing c...

Taking risk away from risk taking: decision insurance in organizations

We present a new mechanism for encouraging risk taking within organizations that relies on the provision of decision insurance to managers. Since insurance increases the likelihood of free riding, we also introduce a technique that mitigates this moral hazard by automatically identifying the social network around the manager and using it as a monitoring group. We show that three possible regime...

Educational and Wage Risk: Public Insurance and Incentives

In a model of education, where individuals are exposed to educational risk and to wage risk within the skilled sector, successful graduation depends both on individual effort to study and on public resources. We show that insuring these risks is a dichotomic task: Wage risk is diversified among the skilled by graduate taxation and skill-contingent loans. Educational risk of failure is mitigated...

Electoral Incentives, Political Risk-Taking and Policy Reform

We analyze the risk-taking behavior of political candidates who are uncertain about the values voters assign to various policy platforms. We show that the majoritarian and proportional electoral systems lead to different outcomes. The proportional system penalizes risky platforms more than the winner-take-all system. Since candidates choose “safer” platforms, in the proportional system voters f...

Appendix for “ Managerial risk - taking incentives and corporate pension policy ”