Risk-Taking and Risk-Sharing Incentives under Moral Hazard

Mohamed Belhaj (), Renaud Bourlès () and Frédéric Deroïan ()

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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.

Keywords: Economie; quantitative (search for similar items in EconPapers)
Date: 2014
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Citations: View citations in EconPapers (2)

Published in American Economic Journal: Microeconomics, 2014, 6 (1), pp.58--90. ⟨10.1257/mic.6.1.58⟩

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Related works:
Journal Article: 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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Persistent link: https://EconPapers.repec.org/RePEc:hal:journl:hal-01474430

DOI: 10.1257/mic.6.1.58

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