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A model intervenes: the many faces of moral hazard

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  • John Latsis
  • Constantinos Repapis

Abstract

This article builds on advances in social ontology to develop a new understanding of how mainstream economic modelling affects reality. We propose a new framework for analysing and describing how models intervene in the social sphere. This framework allows us to identify and articulate three key epistemic features of models as interventions: specificity, portability and formal precision. The second part of the article uses our framework to demonstrate how specificity, portability and formal precision explain the use of moral hazard models in a variety of different policy contexts, including worker compensation schemes, bank regulation and the euro-sovereign debt crisis.

Suggested Citation

  • John Latsis & Constantinos Repapis, 2014. "A model intervenes: the many faces of moral hazard," Cambridge Journal of Economics, Oxford University Press, vol. 38(4), pages 743-760.
  • Handle: RePEc:oup:cambje:v:38:y:2014:i:4:p:743-760.
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    File URL: http://hdl.handle.net/10.1093/cje/bet069
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    Cited by:

    1. Batifoulier, Philippe, 2015. "Aux origines de la privatisation du financement du soin : quand la théorie de l’aléa moral rencontre le capitalisme sanitaire," Revue de la Régulation - Capitalisme, institutions, pouvoirs, Association Recherche et Régulation, vol. 17.

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