Optimism, overconfidence, and moral hazard
Fuente:
arXiv
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| Autore principale: | |
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| Natura: | Preprint |
| Pubblicazione: |
2023
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| _version_ | 1866918216667758592 |
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| author | Sinander, Ludvig |
| author_facet | Sinander, Ludvig |
| contents | I revisit the standard moral-hazard model, in which an agent's preference over contracts is rooted in costly effort choice. I characterise the behavioural content of the model in terms of empirically testable axioms, and show that the model's parameters are identified. I propose general behavioural definitions of relative (over)confidence and optimism, and characterise these in terms of the parameters of the moral-hazard model. My formal results are rooted in a simple but powerful insight: that the moral-hazard model is closely related to the well-known 'variational' model of choice under uncertainty. |
| format | Preprint |
| id |
arxiv_https___arxiv_org_abs_2304_08343 |
| institution | arXiv |
| publishDate | 2023 |
| record_format | arxiv |
| spellingShingle | Optimism, overconfidence, and moral hazard Sinander, Ludvig Theoretical Economics I revisit the standard moral-hazard model, in which an agent's preference over contracts is rooted in costly effort choice. I characterise the behavioural content of the model in terms of empirically testable axioms, and show that the model's parameters are identified. I propose general behavioural definitions of relative (over)confidence and optimism, and characterise these in terms of the parameters of the moral-hazard model. My formal results are rooted in a simple but powerful insight: that the moral-hazard model is closely related to the well-known 'variational' model of choice under uncertainty. |
| title | Optimism, overconfidence, and moral hazard |
| topic | Theoretical Economics |
| url | https://arxiv.org/abs/2304.08343 |