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Articles 1 - 7 of 7
Full-Text Articles in Social and Behavioral Sciences
Estimating The Benefits And Costs Of Forming Business Partnerships, Jungho Lee
Estimating The Benefits And Costs Of Forming Business Partnerships, Jungho Lee
Research Collection School Of Economics
I estimate a matching model of business‐partnership formation to quantify the relative importance of productivity gains, financing gains, and the coordination failure of effort provision (moral hazard) among partners. Productivity gains account for 61% of the gain from the observed partnerships. For partners in the first quartile of the wealth distribution, however, financing accounts for 93% of the gain. The cost of moral hazard corresponds to 42% of the entire gain from partnerships. A loan policy specifically targeting partnerships is less effective in improving welfare than a conventional loan policy that provides loans to individual entrepreneurs.
Crime And Moral Hazard: Does More Policing Necessarily Induce Private Negligence?, Brishti Guha, Ashok S. Guha
Crime And Moral Hazard: Does More Policing Necessarily Induce Private Negligence?, Brishti Guha, Ashok S. Guha
Research Collection School Of Economics
Even risk-neutral individuals can insure themselves against crimes by combining direct expenditure on security with costly diversification. In such cases — and even when one of these options is infeasible — greater policing often actually encourages private precautions.
Crime And Moral Hazard: Does More Policing Necessarily Induce Private Negligence?, Brishti Guha, Ashok S. Guha
Crime And Moral Hazard: Does More Policing Necessarily Induce Private Negligence?, Brishti Guha, Ashok S. Guha
Research Collection School Of Economics
Even risk-neutral individuals can insure themselves against crimes by combining direct expenditure on security with costly diversification. In such cases — and even when one of these options is infeasible — greater policing often actually encourages private precautions.
Pirates And Traders: Some Economics Of Pirate-Infested Seas, Brishti Guha, Ashok S. Guha
Pirates And Traders: Some Economics Of Pirate-Infested Seas, Brishti Guha, Ashok S. Guha
Research Collection School Of Economics
Even where all agents are risk-neutral, merchants can insure themselves against piracy. Such self-insurance is surprisingly invulnerable to moral hazard. Further, there exist a patrolling intensity and/or penalties for captured pirates which, along with mercantile self-insurance, could eliminate piracy.
Strategy Meets Evolution: Games Suppliers And Producers Play, Brishti Guha
Strategy Meets Evolution: Games Suppliers And Producers Play, Brishti Guha
Research Collection School Of Economics
Final goods producers, who may be intrinsically honest (a behavioral type) or opportunistic (strategic), play a repeated game of imperfect information with suppliers of an input of variable (and non-verifiable) quality. Returns to cheating are increasing in the proportion of intrinsically honest producers. If producers compete for another scarce input, adverse selection reduces this proportion enough to enforce universal honesty, whether at a high or a low quality equilibrium. This mechanism limits the proportion of behavioral types in the population of producers over a wide range of parameters: despite their inability to compete with opportunists, they are not wholly wiped …
The Case Of The Errant Executive: Management, Control And Firm Size In Corporate Cheating, Brishti Guha
The Case Of The Errant Executive: Management, Control And Firm Size In Corporate Cheating, Brishti Guha
Research Collection School Of Economics
Firm insiders – a manager and a board – face moral hazard in relation to their outside shareholders in a repeated game with asymmetric information and stochastic market outcomes. The manager determines whether or not outsiders are cheated; the board, whose objectives differ from those of outside shareholders, attempts to control the manager through compensation contracts and dismissal threats Since compensation determines the manager’s incentive to cheat, firms competing for outside capital publicly announce their managerial contracts. However, secret renegotiation between firm and manager is still possible: so outsiders guard against being cheated by limiting their total stake in any …
The Auditor And The Firm: A Simple Model Of Corporate Cheating And Intermediation, Brishti Guha
The Auditor And The Firm: A Simple Model Of Corporate Cheating And Intermediation, Brishti Guha
Research Collection School Of Economics
We apply a game-theoretic model to the analysis of the recent spate of corporate scandals in which firms have cheated their investors, often with the aid of external auditors. We characterize the different types of equilibria that obtain for different parameter ranges in an auditor’s absence (the parameters we consider being early signal accuracy – a measure of transparency – and withdrawal costs – a measure of the liquidity of investments). We also analyze whether and under what conditions the presence of an informed auditor could lead to an improvement in the sense of honest behavior replacing cheating as the …