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Incentive Compatibility and Pricing under Moral Hazard

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dc.affiliation.dptoUC3M. Departamento de Economíaes
dc.contributor.authorJerez, Belén
dc.date.accessioned2012-05-17T12:32:32Z
dc.date.available2012-05-17T12:32:32Z
dc.date.issued2005
dc.description.abstractWe show how to recover equilibrium prices supporting incentive-efficient allocations in a classic insurance economy with moral hazard. Our key modeling choice is to impose the incentive-compatibility constraints on insurance firms, and not on consumers as in Prescott and Townsend [Pareto optima and competitive equilibria with adverse selection and moral hazard, Econometrica 52 (1984) 21–45]. We show that equilibrium prices of insurance contracts are equal to the sum of the shadow costs arising from the resource and incentive-compatibility constraints in the planner's problem. The equilibrium allocations are the same as when the incentive-compatibility constraints are imposed on consumers. As in Prescott and Townsend, the two welfare theorems hold.
dc.description.statusPublicado
dc.format.mimetypeapplication/pdf
dc.format.mimetypetext/plain
dc.identifier.bibliographicCitationReview of Economic Dynamics, 2005, vol. 8, nº 1, p. 28-47
dc.identifier.doi10.1016/j.red.2004.10.005
dc.identifier.issn1094-2025
dc.identifier.publicationfirstpage28
dc.identifier.publicationissue1
dc.identifier.publicationlastpage47
dc.identifier.publicationtitleReview of Economic Dynamics
dc.identifier.publicationvolume8
dc.identifier.urihttp://hdl.handle.net/10016/5317
dc.language.isoeng
dc.publisherElsevier
dc.relation.isversionofhttp://hdl.handle.net/10016/304
dc.relation.isversionofhttp://hdl.handle.net/10016/304
dc.relation.publisherversionhttp://dx.doi.org/10.1016/j.red.2004.10.005
dc.rights©Elsevier
dc.rights.accessRightsopen access
dc.subject.ecienciaEconomía
dc.titleIncentive Compatibility and Pricing under Moral Hazard
dc.typeresearch article*
dc.type.hasVersionAM*
dc.type.reviewPeerReviewed
dspace.entity.typePublication
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