IDEAS home Printed from
MyIDEAS: Login to save this paper or follow this series

Nonlinear Incentive Contracting in Walrasian Markets: A Cournot Approach

  • Hellwig, Martin


    (Sonderforschungsbereich 504)

The paper studies insurance with moral hazard in the context of a Walrasian system of contingent-claims markets. The insurance buyer is modelled as a Cournot monopolist. Price-taking agents condition their expectations on market prices, as in models of rational-expectations equilibrium with asymmetric information. Thereby they correctly anticipate the accident probabilities that are associated with the different possible choices of the insurance buyer's net trades as these trades affect effort incentives. When there are many agents to share the insurance buyers risk, Cournot equilibrium outcomes are close to being second-best and close to outcomes under efficient bilateral contracting with risk neutral insurers. In contrast, if the insurance buyer is a price taker, equilibria are bounded away from being second-best or fail to exist.

To our knowledge, this item is not available for download. To find whether it is available, there are three options:
1. Check below under "Related research" whether another version of this item is available online.
2. Check on the provider's web page whether it is in fact available.
3. Perform a search for a similarly titled item that would be available.

Paper provided by Sonderforschungsbereich 504, Universität Mannheim & Sonderforschungsbereich 504, University of Mannheim in its series Sonderforschungsbereich 504 Publications with number 00-42.

in new window

Length: 37 pages
Date of creation: 11 Sep 2000
Date of revision:
Handle: RePEc:xrs:sfbmaa:00-42
Note: This paper owes a lot to discussions that I have had over the years with Richard Arnott, Tilman Börgers, Winand Emons, Laurenz Kohlleppel, Joe Stiglitz, Thomas von Ungern-Sternberg, and especially Douglas Gale. I am grateful to all of them. I am also grateful for research support from the Deutsche Forschungsgemeinschaft through Sonderforschungsbereich 504 at the University of Mannheim.
Contact details of provider: Postal: D-68131 Mannheim
Phone: (49) (0) 621-292-2547
Fax: (49) (0) 621-292-5594
Web page:

More information through EDIRC

Web page:

Order Information: Email:

No references listed on IDEAS
You can help add them by filling out this form.

This item is not listed on Wikipedia, on a reading list or among the top items on IDEAS.

When requesting a correction, please mention this item's handle: RePEc:xrs:sfbmaa:00-42. See general information about how to correct material in RePEc.

For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: (Carsten Schmidt)

The email address of this maintainer does not seem to be valid anymore. Please ask Carsten Schmidt to update the entry or send us the correct address

If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

If references are entirely missing, you can add them using this form.

If the full references list an item that is present in RePEc, but the system did not link to it, you can help with this form.

If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your profile, as there may be some citations waiting for confirmation.

Please note that corrections may take a couple of weeks to filter through the various RePEc services.

This information is provided to you by IDEAS at the Research Division of the Federal Reserve Bank of St. Louis using RePEc data.