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Regulation and altruism

Izabela Jelovac () and Samuel Samuel Kembou Nzale ()
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Samuel Samuel Kembou Nzale: Aix-Marseille Univ.(Aix-Marseille School of Economics), CNRS, EHESS and Centrale Marseille, F-13002

No 1730, Working Papers from Groupe d'Analyse et de Théorie Economique Lyon St-Étienne (GATE Lyon St-Étienne), Université de Lyon

Abstract: We study optimal contracts in a regulator-agent setting with joint production, altruistic and selfish agents, and uneasy outcome measurement. Such a setting represents sectors of activities such as education and health care provision. The agents and the regulator jointly produce an outcome for which they all care to some extent that is varying from agent to agent. Some agents, the altruistic ones, care more than the regulator does while others, the selfish agents, care less. Moral hazard is present due to the agent's effort that is not contractible. Adverse selection is present too since the regulator cannot a priori distinguish between altruistic and selfish agents. Contracts consist of a simple transfer from the regulator to the agents together with the regulator's input in the joint production. We show that a screening contract is not optimal when we face both moral hazard and adverse selection.

Keywords: altruism; moral hazard; adverse selection; regulator-agent joint production (search for similar items in EconPapers)
JEL-codes: D64 D86 (search for similar items in EconPapers)
New Economics Papers: this item is included in nep-hrm
Date: 2017
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Related works:
Working Paper: Regulation and altruism (2019) Downloads
Working Paper: Regulation and Altruism (2017) Downloads
Working Paper: Regulation and Altruism (2017) Downloads
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