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Regulation and altruism

Izabela Jelovac () and Samuel Nzale
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Samuel Nzale: AMSE - Aix-Marseille Sciences Economiques - EHESS - École des hautes études en sciences sociales - AMU - Aix Marseille Université - ECM - École Centrale de Marseille - CNRS - Centre National de la Recherche Scientifique

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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: adverse selection; moral hazard; altruism; regulator-agent joint production (search for similar items in EconPapers)
Date: 2020-02
New Economics Papers: this item is included in nep-cta, nep-ger, nep-mic and nep-reg
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Published in Journal of Public Economic Theory, Wiley, 2020, 22 (1), pp.49-68. ⟨10.1111/jpet.12368⟩

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Journal Article: Regulation and altruism (2020) Downloads
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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DOI: 10.1111/jpet.12368

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