The Welfare Economics of Moral Hazard
Richard Arnott and
Joseph Stiglitz
Working Paper from Economics Department, Queen's University
Abstract:
This paper shows that, except in certain limiting cases, competitive equilibrium with moral hazard is constrained inefficient. The first section compares the competitive equilibrium and the constrained social optimum in a fairly general model, and identifies six types of market failure. Each of the subsequent sections focusses on a particular market failure.
Pages: 48 pages
Date: 1986
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Working Paper: The Welfare Economics of Moral Hazard (1990) 
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Persistent link: https://EconPapers.repec.org/RePEc:qed:wpaper:635
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