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Moral Hazard and Bargaining Power

Demougin, Dominique ; Helm, Carsten :
Moral Hazard and Bargaining Power.
[Online-Edition: http://dx.doi.org/10.1111/j.1468-0475.2006.00130.x]
In: German Economic Review, 7 (4) pp. 463-470.
[Artikel], (2006)

Offizielle URL: http://dx.doi.org/10.1111/j.1468-0475.2006.00130.x

Kurzbeschreibung (Abstract)

Abstract. We introduce bargaining power in a moral hazard framework where parties are risk-neutral and the agent is financially constrained. We show that the same contract emerges if the concept of bargaining power is analyzed in either of the following three frameworks: in a standard principal2013agent (P2013A) framework by varying the agent's outside opportunity, in an alternating offer game, and in a generalized Nash-bargaining game. However, for sufficiently low levels of the agent's bargaining power, increasing it marginally does affect the equilibrium in the Nash-bargaining game, but not in the P2013A model and in the alternating offer game.

Typ des Eintrags: Artikel
Erschienen: 2006
Autor(en): Demougin, Dominique ; Helm, Carsten
Titel: Moral Hazard and Bargaining Power
Sprache: Englisch
Kurzbeschreibung (Abstract):

Abstract. We introduce bargaining power in a moral hazard framework where parties are risk-neutral and the agent is financially constrained. We show that the same contract emerges if the concept of bargaining power is analyzed in either of the following three frameworks: in a standard principal2013agent (P2013A) framework by varying the agent's outside opportunity, in an alternating offer game, and in a generalized Nash-bargaining game. However, for sufficiently low levels of the agent's bargaining power, increasing it marginally does affect the equilibrium in the Nash-bargaining game, but not in the P2013A model and in the alternating offer game.

Titel der Zeitschrift, Zeitung oder Schriftenreihe: German Economic Review
Band: 7
(Heft-)Nummer: 4
Fachbereich(e)/-gebiet(e): Fachbereich Rechts- und Wirtschaftswissenschaften > Volkswirtschaftliche Fachgebiete > Angewandte Mikroökonomik und Institutionenökonomik
Fachbereich Rechts- und Wirtschaftswissenschaften > Volkswirtschaftliche Fachgebiete
Fachbereich Rechts- und Wirtschaftswissenschaften
Hinterlegungsdatum: 28 Apr 2009 14:05
Offizielle URL: http://dx.doi.org/10.1111/j.1468-0475.2006.00130.x
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