Hunting with Two Bullets: Moral Hazard with a Second Chance
Autor(a) principal: | |
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Data de Publicação: | 2018 |
Tipo de documento: | Artigo |
Idioma: | eng |
Título da fonte: | Repositório Científico de Acesso Aberto de Portugal (Repositórios Cientìficos) |
Texto Completo: | http://hdl.handle.net/10362/82724 |
Resumo: | I study the moral hazard problem where an agent can create an extra instance of effort and potentially improve bad realizations of the outcome before the principal observes it. The agent cannot hide the outcome of his effort, but just the way he achieved it. Findings are that both, principal and agent, value the option of improving the outcome in case of a bad realization if doing so is cheap. I also find that contracted effort is not always decreasing in its cost. Finally, if the creation of the extra instance can cause a punishment for the principal, and if that punishment is sufficiently big, the principal will avoid writing contracts that incentive effort only on the extra chance. |
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Hunting with Two Bullets: Moral Hazard with a Second ChanceMoral HazardAsymmetric InformationContract TheorySecond ChanceI study the moral hazard problem where an agent can create an extra instance of effort and potentially improve bad realizations of the outcome before the principal observes it. The agent cannot hide the outcome of his effort, but just the way he achieved it. Findings are that both, principal and agent, value the option of improving the outcome in case of a bad realization if doing so is cheap. I also find that contracted effort is not always decreasing in its cost. Finally, if the creation of the extra instance can cause a punishment for the principal, and if that punishment is sufficiently big, the principal will avoid writing contracts that incentive effort only on the extra chance.Nova SBERUNFagandini, Paulo2019-09-30T10:08:02Z2018-11-292018-11-29T00:00:00Zinfo:eu-repo/semantics/publishedVersioninfo:eu-repo/semantics/articleapplication/pdfhttp://hdl.handle.net/10362/82724engFagandini, Paulo, Hunting with Two Bullets: Moral Hazard with a Second Chance (November 29, 2018). FEUNL Working Paper Series No. 629info:eu-repo/semantics/openAccessreponame:Repositório Científico de Acesso Aberto de Portugal (Repositórios Cientìficos)instname:Agência para a Sociedade do Conhecimento (UMIC) - FCT - Sociedade da Informaçãoinstacron:RCAAP2024-03-11T04:36:39Zoai:run.unl.pt:10362/82724Portal AgregadorONGhttps://www.rcaap.pt/oai/openaireopendoar:71602024-03-20T03:36:11.765628Repositório Científico de Acesso Aberto de Portugal (Repositórios Cientìficos) - Agência para a Sociedade do Conhecimento (UMIC) - FCT - Sociedade da Informaçãofalse |
dc.title.none.fl_str_mv |
Hunting with Two Bullets: Moral Hazard with a Second Chance |
title |
Hunting with Two Bullets: Moral Hazard with a Second Chance |
spellingShingle |
Hunting with Two Bullets: Moral Hazard with a Second Chance Fagandini, Paulo Moral Hazard Asymmetric Information Contract Theory Second Chance |
title_short |
Hunting with Two Bullets: Moral Hazard with a Second Chance |
title_full |
Hunting with Two Bullets: Moral Hazard with a Second Chance |
title_fullStr |
Hunting with Two Bullets: Moral Hazard with a Second Chance |
title_full_unstemmed |
Hunting with Two Bullets: Moral Hazard with a Second Chance |
title_sort |
Hunting with Two Bullets: Moral Hazard with a Second Chance |
author |
Fagandini, Paulo |
author_facet |
Fagandini, Paulo |
author_role |
author |
dc.contributor.none.fl_str_mv |
RUN |
dc.contributor.author.fl_str_mv |
Fagandini, Paulo |
dc.subject.por.fl_str_mv |
Moral Hazard Asymmetric Information Contract Theory Second Chance |
topic |
Moral Hazard Asymmetric Information Contract Theory Second Chance |
description |
I study the moral hazard problem where an agent can create an extra instance of effort and potentially improve bad realizations of the outcome before the principal observes it. The agent cannot hide the outcome of his effort, but just the way he achieved it. Findings are that both, principal and agent, value the option of improving the outcome in case of a bad realization if doing so is cheap. I also find that contracted effort is not always decreasing in its cost. Finally, if the creation of the extra instance can cause a punishment for the principal, and if that punishment is sufficiently big, the principal will avoid writing contracts that incentive effort only on the extra chance. |
publishDate |
2018 |
dc.date.none.fl_str_mv |
2018-11-29 2018-11-29T00:00:00Z 2019-09-30T10:08:02Z |
dc.type.status.fl_str_mv |
info:eu-repo/semantics/publishedVersion |
dc.type.driver.fl_str_mv |
info:eu-repo/semantics/article |
format |
article |
status_str |
publishedVersion |
dc.identifier.uri.fl_str_mv |
http://hdl.handle.net/10362/82724 |
url |
http://hdl.handle.net/10362/82724 |
dc.language.iso.fl_str_mv |
eng |
language |
eng |
dc.relation.none.fl_str_mv |
Fagandini, Paulo, Hunting with Two Bullets: Moral Hazard with a Second Chance (November 29, 2018). FEUNL Working Paper Series No. 629 |
dc.rights.driver.fl_str_mv |
info:eu-repo/semantics/openAccess |
eu_rights_str_mv |
openAccess |
dc.format.none.fl_str_mv |
application/pdf |
dc.publisher.none.fl_str_mv |
Nova SBE |
publisher.none.fl_str_mv |
Nova SBE |
dc.source.none.fl_str_mv |
reponame:Repositório Científico de Acesso Aberto de Portugal (Repositórios Cientìficos) instname:Agência para a Sociedade do Conhecimento (UMIC) - FCT - Sociedade da Informação instacron:RCAAP |
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Agência para a Sociedade do Conhecimento (UMIC) - FCT - Sociedade da Informação |
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RCAAP |
institution |
RCAAP |
reponame_str |
Repositório Científico de Acesso Aberto de Portugal (Repositórios Cientìficos) |
collection |
Repositório Científico de Acesso Aberto de Portugal (Repositórios Cientìficos) |
repository.name.fl_str_mv |
Repositório Científico de Acesso Aberto de Portugal (Repositórios Cientìficos) - Agência para a Sociedade do Conhecimento (UMIC) - FCT - Sociedade da Informação |
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