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This paper studies incentives provision when agents are characterized either by homo moralis preferences, i.e., their utility is represented by a convex combination of selfish preferences and Kantian morality, or by altruism. In a moral hazard in a team setting with two agents whose efforts affect output stochastically, I demonstrate that the power of extrinsic incentives decreases with the deg...

We study how seller exit and continuing sellers’ behavior on eBay are affected by an improvement in market transparency. The improvement was achieved by reducing strategic bias in buyer ratings. It led to a significant increase in buyer satisfaction with seller performance, but not to an increase in seller exit. When sellers had the choice between exiting—a reduction in adverse selection—and im...

Is a sense of humour a virtue? In an informal sense of the term ‘virtue’, of course it is. A sense of humour is a trait nobody wants to be thought of as lacking, and one that we value in partners, friends and colleagues alike. But the claim that a sense of humour is a moral virtue seems far more controversial. Yet in a fascinating article, just this claim has been advanced by Robert C. Roberts,...

Housing finance is a nontraditional field where actuarial expertise could be applied fruitfully. The development of mortgage instruments requires the application of financial mathematics, while the evaluation and management of the financial risks to which borrowers and lenders are exposed require a knowledge of insurance principles. This paper splits the financial costs of home ownership into s...

Home equity conversion as presently constituted or proposed usually does not deal well with the potential problem of moral hazard. Once homeowners know that the risk of poor market performance of their homes is borne by investors, they have an incentive to neglect to take steps to maintain the homes’ values. They may thus create serious future losses for the investors. A calibrated model for as...

Article history: In a framework of repeatedReceived 12 April 2007 Received in revised form 2 July 2008 Accepted 10 July 2008 Available online 17 July 2008