Product-Consumer Substitution and Safety Regulation: Theory and Evidence from Simulation
Konrad Grabiszewski,
Alex Horenstein and
Nicolo Bates
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Konrad Grabiszewski: University of Miami
Nicolo Bates: University of Miami
No 2016-05, Working Papers from University of Miami, Department of Economics
Abstract:
We develop a novel theory of safety regulation that incorporates both moral hazard and adverse selection. We test our theory using unique data from more than 2 million observations obtained from iRacing, an online racing simulation. Our theory provides new explanations of phenomena studied in the literature. We offer novel policy implications; in particular, we introduce the concept of two-dimensional regulation.
Keywords: safety regulation; adverse selection; moral hazard Publication Status: Under Review (search for similar items in EconPapers)
JEL-codes: D8 K2 L5 (search for similar items in EconPapers)
Date: 2016-10-01
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https://www.herbert.miami.edu/_assets/files/repec/WP2016-06.pdf First version, 2016 (application/pdf)
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Persistent link: https://EconPapers.repec.org/RePEc:mia:wpaper:2016-06
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