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Journal Articles American Economic Journal: Microeconomics Year : 2014

Risk-Taking and Risk-Sharing Incentives under Moral Hazard

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Abstract

This paper explores the effect of moral hazard on both risk-taking and informal risk-sharing incentives. Two agents invest in their own project, each choosing a level of risk and effort, and share risk through transfers. This can correspond to farmers in developing countries, who share risk and decide individually upon the adoption of a risky technology. The paper mainly shows that the impact of moral hazard on risk crucially depends on the observability of investment risk, whereas the impact on transfers is much more utility dependent.
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Dates and versions

hal-01474430 , version 1 (22-02-2017)

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Mohamed Belhaj, Renaud Bourlès, Frédéric Deroïan. Risk-Taking and Risk-Sharing Incentives under Moral Hazard. American Economic Journal: Microeconomics, 2014, 6 (1), pp.58--90. ⟨10.1257/mic.6.1.58⟩. ⟨hal-01474430⟩
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