On moral hazard and nonexclusive contracts

Andrea Attar and Arnold Chassagnon
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Arnold Chassagnon: TSE-R - Toulouse School of Economics - UT Capitole - Université Toulouse Capitole - UT - Université de Toulouse - INRA - Institut National de la Recherche Agronomique - EHESS - École des hautes études en sciences sociales - CNRS - Centre National de la Recherche Scientifique, GREMAQ - Groupe de recherche en économie mathématique et quantitative - UT Capitole - Université Toulouse Capitole - UT - Université de Toulouse - INRA - Institut National de la Recherche Agronomique - EHESS - École des hautes études en sciences sociales - CNRS - Centre National de la Recherche Scientifique, PJSE - Paris-Jourdan Sciences Economiques - ENS-PSL - École normale supérieure - Paris - PSL - Université Paris Sciences et Lettres - EHESS - École des hautes études en sciences sociales - ENPC - École nationale des ponts et chaussées - CNRS - Centre National de la Recherche Scientifique, PSE - Paris School of Economics - UP1 - Université Paris 1 Panthéon-Sorbonne - ENS-PSL - École normale supérieure - Paris - PSL - Université Paris Sciences et Lettres - EHESS - École des hautes études en sciences sociales - ENPC - École nationale des ponts et chaussées - CNRS - Centre National de la Recherche Scientifique - INRAE - Institut National de Recherche pour l’Agriculture, l’Alimentation et l’Environnement

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Abstract: We study an economy where intermediaries compete over contracts in a nonexclusive insurance market affected by moral hazard. In this context, we show that, contrarily to what is commonly believed, market equilibria may fail to be efficient even if the planner is not allowed to enforce exclusivity of trades (third best inefficiency). Our setting is the same as that of Bisin and Guaitoli [Bisin, A., Guaitoli, D., 2004. Moral hazard with nonexclusive contracts. Rand Journal of Economics 2, 306-328]. We hence argue that some of the equilibrium conditions they imposed are not necessary, and we exhibit a set of equilibrium allocations which fail to satisfy them.

Keywords: Non-exclusivity; Insurance; Moral hazard (search for similar items in EconPapers)
Date: 2009-09
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Citations: View citations in EconPapers (23)

Published in Journal of Mathematical Economics, 2009, 45 (9-10), pp.511-525. ⟨10.1016/j.jmateco.2008.09.007⟩

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Related works:
Journal Article: On moral hazard and nonexclusive contracts (2009)
Working Paper: On moral hazard and nonexclusive contracts (2009)
Working Paper: On moral hazard and nonexclusive contracts (2006)
Working Paper: On moral hazard and nonexclusive contracts (2006)
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Persistent link: https://EconPapers.repec.org/RePEc:hal:journl:halshs-00754338

DOI: 10.1016/j.jmateco.2008.09.007

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