EconPapers    
Economics at your fingertips  
 

The negative trade-off between risk and incentives: Evidence from the american whaling industry

Eric Hilt

Explorations in Economic History, 2008, vol. 45, issue 4, 424-444

Abstract: This paper analyzes the trade-off between risk and incentives in the share contracts of the American whaling industry. Using a newly collected panel of 5378 individuals who sailed on more than 1000 whaling voyages from 1855-68, the response of sailors' compensation to an increase in risk is estimated. The risks used to identify this response resulted from the commerce-raiding naval vessels of the Confederacy during the Civil War. As the Confederate cruisers sailed primarily in the Atlantic, and therefore posed far less of a threat to whaling voyages to other oceans, a quasi-experimental approach focusing on the differences between Atlantic voyages compared to others is implemented. The results are consistent with a negative trade-off between risk and incentives in the industry's contracts. Moreover, evidence is found of selection among less risk-averse sailors and merchants into riskier voyages during the war.

Keywords: Risk; Incentives; Whaling; Compensation; Civil; war; Moral; hazard (search for similar items in EconPapers)
Date: 2008
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (2) Track citations by RSS feed

Downloads: (external link)
http://www.sciencedirect.com/science/article/pii/S0014-4983(08)00015-6
Full text for ScienceDirect subscribers only

Related works:
Working Paper: The Negative Trade-off Between Risk and Incentives: Evidence from the American Whaling Industry (2006) Downloads
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link: https://EconPapers.repec.org/RePEc:eee:exehis:v:45:y:2008:i:4:p:424-444

Access Statistics for this article

Explorations in Economic History is currently edited by R.H. Steckel

More articles in Explorations in Economic History from Elsevier
Bibliographic data for series maintained by Haili He ().

 
Page updated 2020-09-05
Handle: RePEc:eee:exehis:v:45:y:2008:i:4:p:424-444