Work detail

Moral Hazard Problem of an Insurance Broker

Author: Bc. Klára Kališková
Year: 2008 - summer
Leaders: Ing. Ivo Koubek
Consultants:
Work type: Bachelors
Language: Czech
Pages: 64
Awards and prizes: B.A. with distinction from the Dean of the Faculty of Social Sciences for an extraordinarily good bachelors diploma thesis.
Link:
Abstract: This paper analyses the moral hazard problem of insurance brokers which rises from the relationship between an insurance company and agents who gain new clients for this company. We deal with a hidden action problem in which the insurance company in the role of principal doesn´t have the possibility to observe the agents´ behavior. Principal in such a situation has to make agents to act on behalf of him by means of appropriate incentive contract. A form of such contract is in the concern of this work. In the first chapter we describe the solution of this problem that is offered by standard microeconomic theory. Second chapter focuses on the verification of capabilities of this theory in practice by using laboratory experiments. The conclusion is devoted to theories of other-regarding preferences which help us to remedy certain shortcomings of the standard microeconomic theory.
Downloadable: Bachelor Thesis of Klára Kališková
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