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Regulation and altruism

Izabela Jelovac () and Samuel Nzale
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Samuel Nzale: AMU - Aix Marseille Université

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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: regulator-agent joint production; altruism; moral hazard; adverse selection (search for similar items in EconPapers)
New Economics Papers: this item is included in nep-cta, nep-ger, nep-mic and nep-reg
Date: 2019
Note: View the original document on HAL open archive server: https://halshs.archives-ouvertes.fr/halshs-01618043
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Published in Journal of Public Economic Theory, Wiley, inPress, ⟨10.1111/jpet.12368⟩

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Related works:
Working Paper: Regulation and Altruism (2017) Downloads
Working Paper: Regulation and altruism (2017) Downloads
Working Paper: Regulation and Altruism (2017) Downloads
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