Risk-Taking and Risk-Sharing Incentives under Moral Hazard

Mohamed Belhaj (), Renaud Bourl?s and Fr?d?ric Dero?an
Authors registered in the RePEc Author Service: Renaud Bourlès ()

American Economic Journal: Microeconomics, 2014, vol. 6, issue 1, 58-90

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.

JEL-codes: D81 D82 D86 G22 (search for similar items in EconPapers)
Date: 2014
Note: DOI: 10.1257/mic.6.1.58
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Citations: View citations in EconPapers (2)

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Related works:
Working Paper: Risk-Taking and Risk-Sharing Incentives under Moral Hazard (2014)
Working Paper: Moral hazard and risk-sharing: risk-taking as an incentive tool (2010)
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