Using Both Sociological And Economic Incentives To Reduce Moral Hazard
AbstractEconomists tend to focus on monetary incentives. In the model developed here, both sociological and economic incentives are used to diminish the apparent moral hazard problem existing in commodity grading. Training that promotes graders' response to sociological incentives is shown to increase expected benefits. The model suggests that this training be increased up to the point where the marginal benefit due to training equals its marginal cost. It may be more economical to influence the grader's behavior by creating cognitive dissonance through training and rules rather than by using economic incentives alone.
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Bibliographic InfoPaper provided by Southern Agricultural Economics Association in its series 2003 Annual Meeting, February 1-5, 2003, Mobile, Alabama with number 35009.
Date of creation: 2003
Date of revision:
Other versions of this item:
- Richter, Francisca G.-C. & Diaz, Edgar F. Pebe & Brorsen, B. Wade & Currier, Kevin, 2003. "Using Both Sociological and Economic Incentives to Reduce Moral Hazard," Journal of Agricultural and Resource Economics, Western Agricultural Economics Association, vol. 28(02), August.
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Staff General Research Papers
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