Incentives and Government Relief for Risk
Government relief is offered for a wide range of risks - - natural disaster, economic dislocation, sickness and injury. This paper explores the effect of such relief on incentives and the allocation of risk in a model with private insurance. It is shown that government relief is inefficient, even when its level is less than the private insurance coverage that individuals would otherwise have purchased and even when private insurance coverage is incomplete due to problems of moral hazard.
|Date of creation:||Jun 1989|
|Publication status:||published as Journal of Risk and Uncertainty, Vol. 4, No. 2, pp. 167-175, (1991).|
|Contact details of provider:|| Postal: National Bureau of Economic Research, 1050 Massachusetts Avenue Cambridge, MA 02138, U.S.A.|
Web page: http://www.nber.org
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- Sanford Grossman & Oliver Hart, "undated".
"An Analysis of the Principal-Agent Problem,"
Rodney L. White Center for Financial Research Working Papers
15-80, Wharton School Rodney L. White Center for Financial Research.
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Bell Journal of Economics,
The RAND Corporation, vol. 10(1), pages 74-91, Spring.
- Richard J. Arnott & Joseph E. Stiglitz, 1983.
"Moral Hazard and Optimal Commodity Taxation,"
NBER Working Papers
1154, National Bureau of Economic Research, Inc.
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