Disentangling Moral Hazard and Adverse Selections

• 成果类型: Article
• 署名作者: Castro-Pires, Henrique; Chade, Hector; Swinkels, Jeroen
• 署名单位: University of Surrey; Arizona State University; Arizona State University-Tempe; Northwestern University
• 刊物名称: AMERICAN ECONOMIC REVIEW
• ISSN/ISSBN: 0002-8282
• DOI: 10.1257/aer.20220100
• 发表日期: 2024
• 页码: 1-37
• 关键词: 1st-order approach; mechanisms; CONTRACTS; WEALTH

摘要

While many real -world principal -agent problems have both moral hazard and adverse selection, existing tools largely analyze only one at a time. Do the insights from the separate analyses survive when the frictions are combined? We develop a simple method-decouplingto study both problems at once. When decoupling works, everything we know from the separate analyses carries over, but interesting interactions also arise. We provide simple tests for whether decoupling is valid. We develop and numerically implement an algorithm to calculate the decoupled solution and check its validity. We also provide primitives for decoupling to work and analyze several extensions. (JEL D82, D86)