In this paper, following the work of Hare, we consider moral reasoning not as the application of moral norms and principles, but as reasoning about what ought to be done in a particular situation, with moral norms perhaps emerging from this reasoning. We model this situated reasoning drawing on our previous work on argumentation schemes, here set in the context of Action-Based Alternating Trans...

Last changes: 11/15/10 Word Count: 6776 (main text); 9803 (total w/ footnotes)

We study privatization under moral hazard and adverse selection. We show that if the fraction of efficient investors is either insignificant or productivity differences between efficient and inefficient investors are negligible, the government would offer a pooling contract and sell the same fraction of equity to both types of investors. The lower the productivity difference, the greater the eq...

This paper describes the incentives for firms to seek voluntary product safety certifications. We consider a firm which makes the decision of whether or not to seek certification prior to selling the product. We show that, even when the firm and the consumers have same beliefs about the product safety there are incentives for the firm to seek safety certification. The main analysis investigates...

Using individual policies and claims data from the Croatian mandatory motor insurance we test the theoretical proposition that under moral hazard, experience rated pricing scheme should generate the negative state dependence in claims, i.e. that drivers should drive more safely after they had an accident. The empirical challenge in these tests is to disentangle the state dependence from unobser...

There exists the problem of information asymmetry among the participants in construction project who form economic partnerships one another. Information asymmetries among the participants in construction project places a premium on adverse selection and moral hazard. The major objective of this article is to implement the mechanisms of incentive and monitoring under the framework of principal-a...

We study the effects of improvements in eBay’s rating mechanism on seller exit and continuing sellers’ behavior. Following a large sample of sellers over time, we exploit the fact that the rating mechanism was changed to reduce strategic bias in buyer rating. That improvement did not lead to increased exit of poorly rated sellers. Yet, buyer valuation of the staying sellers—especially the poorl...

An example of a sender-receiver game, due to Farrell, is studied to illustrate the role of incentive constraints in the design of optimal communication systems between rational individuals whose interests are not the same. Some noise in the communication system is essential for substantive communication. Informational and strategic incentive constraints are linear, so finding an optimal incenti...