Social Norms and Moral Hazard
The probability of income loss depends on talent and effort. Effort has positive externalities and therefore individuals are awarded status in proportion to their perceived diligence. The social norm requires more effort from individuals perceived as more talented. But talent is private information and individuals cuningly choose effort so as to manipulate the public perception of their talent. We analyze the workings of social insurance system in this setting.
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|Date of creation:||1997|
|Contact details of provider:|| Postal: UPPSALA UNIVERSITY, DEPARTMENT OF ECONOMICS, S-751 20 UPPSALA SWEDEN.|
Phone: + 46 18 471 25 00
Fax: + 46 18 471 14 78
Web page: http://www.nek.uu.se/
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- Assar Lindbeck & Sten Nyberg & Jörgen W. Weibull, 1999.
"Social Norms and Economic Incentives in the Welfare State,"
The Quarterly Journal of Economics,
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- Lindbeck, Assar & Nyberg, Sten & Weibull, Jörgen W., 1997. "Social Norms and Economic Incentives in the Welfare State," Working Paper Series 476, Research Institute of Industrial Economics.
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- Kandel, Eugene & Lazear, Edward P, 1992. "Peer Pressure and Partnerships," Journal of Political Economy, University of Chicago Press, vol. 100(4), pages 801-817, August.
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- Steven Shavell, 1979. "On Moral Hazard and Insurance," The Quarterly Journal of Economics, Oxford University Press, vol. 93(4), pages 541-562.
- Dutta, Prajit K. & Radner, Roy, 1994. "Moral hazard," Handbook of Game Theory with Economic Applications,in: R.J. Aumann & S. Hart (ed.), Handbook of Game Theory with Economic Applications, edition 1, volume 2, chapter 26, pages 869-903 Elsevier.
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