MARKET FAILURE WITH MORAL HAZARD AND SIDE TRADING

• 成果类型: Article
• 署名作者: KAHN, CM; MOOKHERJEE, D
• 署名单位: Indian Statistical Institute; Indian Statistical Institute Delhi
• 刊物名称: JOURNAL OF PUBLIC ECONOMICS
• ISSN/ISSBN: 0047-2727
• DOI: 10.1016/0047-2727(94)01467-3
• 发表日期: 1995
• 页码: 159-184
• 关键词: Moral hazard; SIDE TRADING; coalitions

摘要

This paper compares full-information insurance markets (a) with markets where accident-reducing effort levels are unverifiable but trades between every pair of agents are verifiable and (b) with markets where neither effort nor trades are verifiable. Markets are represented by a contracting game, with a solution concept allowing coordination among coalitions through information-constrained contracts. Each informational setting yields a correspondence between market outcomes and the appropriate notion of constrained efficiency in a social planner's problem. Although incentive externalities do not cause market outcomes to be constrained inefficient, they do imply a welfare gain from public verifiability of trades.