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Using Both Sociological and Economic Incentives to Reduce Moral Hazard

Francisca G.-C. Richter, Edgar F. Pebe Diaz, B Brorsen and Kevin Currier

Journal of Agricultural and Resource Economics, 2003, vol. 28, issue 2, 10

Abstract: Economists tend to focus on monetary incentives. In the model developed here, both sociological and economic incentives are used to diminish the apparent moral hazard problem existing in commodity grading. Training that promotes graders' response to sociological incentives is shown to increase expected benefits. The model suggests this training be increased up to the point where the marginal benefit due to training equals its marginal cost. It may be more economical to influence the grader's behavior by creating cognitive dissonance through training and rules rather than by using economic incentives alone.

Keywords: Institutional; and; Behavioral; Economics (search for similar items in EconPapers)
Date: 2003
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http://ageconsearch.umn.edu/record/31096/files/28020364.pdf (application/pdf)

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Working Paper: USING BOTH SOCIOLOGICAL AND ECONOMIC INCENTIVES TO REDUCE MORAL HAZARD (2003) Downloads
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Persistent link: https://EconPapers.repec.org/RePEc:ags:jlaare:31096

DOI: 10.22004/ag.econ.31096

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