Moral Hazard, Risk Aversion and Efficiency

6 Pages Posted: 21 Jan 2015

Date Written: December 2014

Abstract

This note revisits the classic moral‐hazard model, but assumes that the output distribution has moving support and punishments are limited. The results show that the principal can implement an efficient solution if the agent is sufficiently risk averse.

Keywords: efficiency, moral hazard, risk aversion

JEL Classification: D82, D86, M52

Suggested Citation

Gürtler, Oliver, Moral Hazard, Risk Aversion and Efficiency (December 2014). Bulletin of Economic Research, Vol. 66, Issue S1, pp. S104-S109, 2014, Available at SSRN: https://ssrn.com/abstract=2552960 or http://dx.doi.org/10.1111/boer.12021

Oliver Gürtler (Contact Author)

University of Cologne ( email )

Albertus-Magnus-Platz
Cologne, 50923
Germany

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