Publication detail

Moral hazard and adverse selection when survival probability is maximized

Author(s): prof. RNDr. Jiří Hlaváček CSc.,
PhDr. Michal Hlaváček Ph.D.,
Type: IES Working Papers
Year: 2006
Number: 22
ISSN / ISBN:
Published in: IES WP 2006/22
Publishing place: Prague
Keywords: principal-agent problem, moral hazard; adverse selection; probability of survival, Pareto distribution of probability
JEL codes: D82
Suggested Citation: Hlavaček, J., Hlaváček, M., " “Morální hazard“ a „nepříznivý výběr“ při maximalizaci pravděpodobnosti ekonomického přežití " IES Working Paper 22/2006, IES FSV. Charles University.
Abstract: This paper analyses problems within the asymmetric information models (principal agent models) where we replace standard assumption of maximisation of expected income by maximisation of probability of economic survival. This paper concentrates on two basic models- adverse selection model and moral hazard model. In both cases the effect of asymmetry of information gets weaker or even disappears. Contrary to standard approach the competitive Pareto effective equilibrium could exists in both models with pooled contract with full coverage of possible accident by the principal
Downloadable: WP 2006_22_Hlavacci

Partners

Deloitte

Sponsors

CRIF
McKinsey
Patria Finance