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Catastrophic wildfire is an increasingly familiar phenomenon on multiple continents. In the United States, concerns about uncontrolled, destructive wildfire have prompted some major insurance carriers to cease writing new policies or to non-renew existing policies. These trends affect not only policyholders, but also, vulnerable communities that already face multiple obstacles to securing property or renters insurance. This study reviews the social and behavioral sciences literatures on wildfire risk in the United States and insurance protection by homeowners. Three categories of research emerge from the review, namely, homeowner as rational actor, wildfire governance and risk management, and wildfire and social equity. There is abundant scholarship on determinants of homeowner decisions to manage wildfire risk by self-protecting or by purchasing insurance, but comparatively little research on the policy implications of shrinking markets for insurance. Policy research on the needs of underinsured and uninsured populations is also relatively undeveloped. Overlaying Lasswell's social process framework on the three dominant research themes, we find not only divergent research questions, models, and methods, but also, important differences in which stakeholders and stakeholder values are considered. There are opportunities for the different literatures to learn from one another, but also, to sharpen their focus on insurance as a scarce and uncertain resource amid climate change and as property development continues to expand in wildfire-prone areas. [ABSTRACT FROM AUTHOR]

In this paper, we design the Pareto-optimal reinsurance contract for both the insurer and the reinsurer by minimizing the convex combination of the risk-adjusted value of the insurer's liability and the reinsurer's liability, where capital at risk is calculated by the value at risk (VaR) or conditional value at risk (CVaR). In order to prevent the moral hazard, we assume that both ceded and retained loss functions are increasing functions. We analyze the optimal solutions for a wide class of reinsurance premium principles. When the reinsurance premium principles satisfy three axioms: law invariance, risk loading and preserving convex order, we find that layer reinsurance is always optimal over the assumed risk measures. Then we impose an additional weak constraint on the premium principle to simplify the form of layer reinsurance which is optimal. Finally, we illustrate the applicability of our results by deriving the parameters of the optimal layer reinsurance explicitly under the expected value principle and Wang's premium principle. [ABSTRACT FROM AUTHOR]

We consider a heterogeneous Susceptible–Infected–Recovered epidemic model, calibrated to the COVID-19 pandemic characteristics. We study the equilibrium of a voluntary social distancing game on a network of individuals subject to epidemic risk. We quantify the absolute and relative utility gaps across age cohorts. We further introduce life insurance in the model, which serves to mitigate the loss in the severe individual outcomes. We find that in most cases, insurance decreases the risk of contagion in the network because more individuals can be incentivized to self-isolate. On the other hand, in the case when the insurer does not have sufficient information on the self-isolation strategy of the individual, insurance can introduce moral hazard. We find that when premiums cannot be sufficiently differentiated, individuals may choose not to socially distance. This illustrates the importance of disclosing self-isolation strategies to the insurer, or inferring these strategies for the various types. Partial monitoring of social distancing strategy can mitigate the two problems of moral hazard and adverse selection. [ABSTRACT FROM AUTHOR]

Most entrepreneurs seek VC funding after the reward-based crowdfunding campaign succeeds, and venture capitalists (VCs) can contribute to the project in two aspects: investment and operational expertise. With a game-theoretical model, we find that entrepreneurs face twelve possible scenarios contingent on the mass market revenue and revenue share, including the six scenarios wherein neither side exerts effort to complete the project. To attract VC funding and ensure the project completion after a campaign success, entrepreneurs should set the funding goal above a certain threshold. Specifically, we identify three ranges of the revenue share and derive the lower bound for the funding goal in each range. However, we notice that entrepreneurs prefer a low funding goal to promise the campaign success and the optimal goal will be the lower bound in each range. Moreover, we show that the revenue share is decisive to the role of VCs in the project. If the entrepreneur's share exceeds a high threshold, the venture capitalist becomes a pure investor with no incentive to exert effort, similar to the role of banks; if the share is less than a low threshold, the entrepreneur won't follow up but transfers the project, and the VC investor will be a project owner; if the share stays medium, the VC investor acts as a partner and there may exist "free-riding". In the extension, we consider the revenue share an endogenous and analyse the role of VCs further. Interestingly, the VC investor prefers to own the project and occupy all revenue in mass market, while the entrepreneur treats the inefficient venture capitalist as a pure investor and the efficient one as a partner. In addition, when cooperating with efficient VCs, the entrepreneur is more likely to enlarge her share as the mass market revenue increases. [ABSTRACT FROM AUTHOR]

This article discusses the significance of international borders in Europe and Northeast Asia during the Cold War (1945–1989) and after. Using the concept of 'moral hazard', the article examines what happens when great powers frequently violate the borders of neighboring countries without suffering adverse repercussions. Norms of sovereignty and territorial integrity are viable only if large countries are willing to uphold them most of the time. The Soviet Union used or threatened to use military force against East European countries on numerous occasions (1953, 1956, 1968, and 1980–1981) with impunity. The Russian Federation adopted a broadly similar policy toward neighboring countries that had been republics of the Soviet Union until 1991. Russian forces in Georgia, Moldova, Tajikistan, Belarus, and Ukraine served as instruments of Russian hegemony in those countries. Until 2014, Western governments made little or no effort to deter or counter Russian military encroachments in neighboring republics. By the principle of moral hazard, leaders in the Kremlin came to believe that they could act with a free hand in the former USSR. [ABSTRACT FROM AUTHOR]

In a multi-agent contracting problem, agents are linked in performance through two channels, effort spillover, governed by spillover network, and risk correlation, governed by risk structure. Assigning compensation weights on peers' performances can not only filter out common risks but also alter agent's incentives. We study how the network and risk structure jointly determine the optimal linear contract. First, the relative compensation sensitivity is determined by ratio of the dot product, between spillover vector and pure hedge portfolio, to unhedgeable risk. We then propose an index named informativeness along the spillover direction and argue that this index measures how precisely the principal can infer the agent's effort. By showing that both the implemented effort and induced welfare are increasing in the informativeness index, we argue that this index captures how central each agent is in this economy. Finally, results regarding relative sensitivities still hold under optimal contract with bounded compensation. [ABSTRACT FROM AUTHOR]

The urgent need to reduce greenhouse gas emissions, remove carbon from the atmosphere and stabilize natural carbon sinks has led to the development of many carbon management measures, increasingly including voluntary carbon offsets (VCOs). We studied carbon management in universities, institutions with large carbon footprints and considerable influence in climate science and policy fora. However, concerns that VCOs may deter adopters (including universities) from adopting other carbon reduction measures and limit emissions reductions, for example, through moral hazard, have been raised but understudied. We compared the carbon management characteristics (priorities, policies, practices and emissions) of universities that did and did not adopt VCOs. We found adopters measured carbon emissions for longer, and had set targets to reach net zero earlier than had non-adopters. Adopters of VCOs also undertook more carbon management practices in both 2010 and 2020 than non-adopters. We also found that both adopters and non-adopters significantly increased their carbon management practices over the decade studied, but with no difference between groups. Gross CO2 emissions were reduced significantly over time by adopters of VCOs but not by non-adopters, whereas carbon intensity and percentage annual emissions reductions did not relate to adoption status. Consequently, our study showed no indication of mitigation deterrence due to adoption of VCOs at the universities studied. Rather, greater emissions reductions correlated with earlier net zero target dates, and a higher number of policies and carbon management practices. However, our study was constrained to universities that were affiliated with a national environmental network, so research beyond these organizations, and with individuals, would be useful. The survey was voluntary, exposing the study to potential self-selection bias so the findings may not be generalized beyond the study group. Finally, we found the carbon accounting method currently required of universities for scope 1 and 2 emissions may underestimate emissions reductions, particularly for adopters of VCOs. Augmenting the current location-based accounting method with market-based carbon accounts may overcome this. Adopters of voluntary carbon offsets (VCOs) undertook more carbon management practices than non-adopters. Evidence for mitigation deterrence was therefore not found (e.g. via moral hazard). Both adopters and non-adopters of carbon offsets used mitigation hierarchies found in carbon management literature (measure, reduce then offset). However, clarity on reducing emissions to as low as reasonably practicable is lacking in the literature. Reductions in scope 1 and 2 emissions may be underestimated, especially for adopters of VCOs who adopted more practices not included in current carbon reporting (e.g. purchasing renewable energy). This may be overcome by reporting market-based emissions alongside location-based emissions. [ABSTRACT FROM AUTHOR]

The Bosnian 'safe areas' established in the 1990s failed abysmally at civilian protection; indeed, by generating moral hazard, they may have worsened the humanitarian situation. Drawing on declassified documents as well as other primary sources, this article makes the case that US, British, and French support for the safe areas can be understood as an instance of mutual alliance entanglement. The United States and its principal European allies had serious doubts that the safe areas could effectively protect civilians. Nevertheless, the Western powers agreed to support the safe areas diplomatically and by means of a limited NATO airpower commitment. The expectation was that this would allow them to signal alliance unity after a period of transatlantic discord and showcase their ability for joint action. The article sheds new light on the origins of the Bosnian safe areas and illuminates how alliance pressures might pull NATO members toward ill-conceived military interventions. [ABSTRACT FROM AUTHOR]

This paper examines how natural disasters affect local public finances and their interplay with intergovernmental transfers and external resources. Exploiting the randomized nature of the 2013 Typhoon Haiyan, one of the most devastating natural disasters in recent history, we document its causal effect on the local government fiscal dynamics. Combining data on local government finance with reports on the level of damages and using difference-in-differences with instrumental variable to analyze the data, we show that local public revenue and expenditures remain largely unaffected, except for debt payments. However, we find important heterogeneity in local revenue responses: poorer municipalities raised comparatively lower revenue in the aftermath of the Typhoon. We also provide evidence that external funding did not lead to lower tax collection efforts, but instead leads to higher local expenditures, suggesting that disaster aid does not cause a moral hazard problem in local governments' spending decisions. [ABSTRACT FROM AUTHOR]

Avoiding moral hazard is a recurrent argument of those seeking to limit the development of European financial support mechanisms. Germany has been the traditional leader of this coalition of actors in the European Union (EU). However, in reaction to the Covid-19 pandemic, Germany supported an EU response which included grants and massive debt issuance. What was previously presented as unacceptable – because of moral hazard – became appropriate. This contribution seeks to explain why the German government ceased to emphasise the moral hazard problem in EU economic governance. We argue that the answer is not because of a challenge to the relevance of moral hazard per se, or because the Germans lost interest in the moral hazard problem, but rather because German policymakers were discursively constrained by one of the dominant meanings of moral hazard they had previously imposed – which lost its relevance in the context of a symmetric exogenous shock. [ABSTRACT FROM AUTHOR]

Regulatory inconsistencies at different jurisdictional levels have contributed to the global expansion of the exotic pet trade, with resultant increases in the spread of invasive species and pathogens. Researchers have enumerated multiple limitations and environmental risks posed by international and national rules that govern the exotic pet trade, yet little attention has focused on the regulation of the exotic pet trade within national borders. We reviewed state‐level regulations that apply to the trade of vertebrate animal taxa in the United States. Definitions and classifications for regulating different vertebrate taxa varied greatly across states, and the terms pet and companion animal were poorly defined and inconsistent across states. States implemented regulations that permit trade in exotic vertebrate pets that are banned from import into the United States owing to public health and conservation concerns. Once species have been imported into the United States, inconsistent internal regulations facilitate the movement of animals that pose substantial invasion and disease risks. Violations of state laws were typically listed as misdemeanors, and the median fine for violating state wildlife trade laws was $1000. Inconsistent and incomplete regulation of exotic vertebrate pets across state borders, in conjunction with limited penalties for violating regulations, has facilitated continued possession of exotic pets in states where these animals are banned. Based on our review of regulatory weaknesses, we conclude that a transition to a federally enforced list of vertebrate species that may be traded as pets is needed, with all other vertebrate species banned from the exotic pet trade unless their potential invasion and disease risks have been assessed and demonstrated to be low or nonexistent. [ABSTRACT FROM AUTHOR]

Purpose: At the global level, disaster risk finance (DRF) is playing an increasingly prominent role in the international agendas for climate change adaptation. However, before implementing such agendas, it is essential to understand the needs and limitations of DRF in the subnational context where they need to impact. This research aims to gain insights into the perspectives of community and governmental actors in Colombia regarding DRF. Its goal is to promote the specific design of collaborative educational and technical assistance processes that consider their interests in the subject and the cultural diversity of the territories. Design/methodology/approach: To achieve this, semi-structured interviews were conducted, and the findings were organized to highlight key aspects that help to understand DRF perspectives in the Colombian context. Findings: It was found that the most significant limitations of implementing DRF include a lack of knowledge on the topic, corruption that encourages a reactive approach and the absence of economic resources. Concerns have emerged regarding the possibility of climate risk insurance becoming a profit-driven enterprise and the potential development of dependency behaviors within community groups, leading to maladaptation and moral hazard. Similarly, the implementation of DRF through foreign funds has raised concerns about the loss of territorial sovereignty and autonomy. Originality/value: This is one of the first studies that carry out this kind of research and contributes to the formulation of inclusive public policies for DRF in different contexts worldwide. [ABSTRACT FROM AUTHOR]

In a moral hazard framework, an agent considers undertaking a task of uncertain difficulty. An immediate disclosure of the task's difficulty by the principal convinces the agent to perform only easy tasks. By contrast, information design theory predicts that delayed disclosure can induce the agent to continue working even when the work turns out to be challenging. Our experimental evidence confirms that delayed disclosure outperforms immediate disclosure and no disclosure, as theory predicts, but only if immediate disclosure is not available. However, when the principal is faced with the choice between the two policies and chooses delayed disclosure over immediate disclosure, the superiority of delayed disclosure disappears due to the agent's intention-based reciprocity towards the principal. [ABSTRACT FROM AUTHOR]

Background: Charting is an essential component of professional nursing practice and is arguably a key element of patient safety in surgery: without proper, objective, and timely documentation, both benign and tragical errors can occur. From surgery on wrong patients to wrong limbs, to the omission of antibiotics administration, many harms can happen in the operating room. Documentation has thus served as a safeguard for patient safety, professional responsibility, and professional accountability. In this context, we were puzzled by the practices we observed with respect to charting compliance with the surgical safety checklist (SSC) during a study of surgical teams in a large, urban teaching hospital in Canada (pseudonym 'C&C'). Methods: This article leverages institutional ethnography and a subset of data from a larger study to describe and explain the social organisation of the system that monitored surgical safety compliance at C&C from the standpoint of operating room nurses. This data included fieldnotes from observations of 51 surgical cases, on-the-spot interviews with nurses, formal interviews with individuals who were involved in the design and implementation of the SSC, and open-ended questions from two rounds of survey of OR teams. Findings: We found that the compliance form and not the SSC itself formed the basis for reporting. To meet hospital accuracy in charting goals and legislated compliance documentation reporting requirements nurses 'pre-charted' compliance with the surgical checklist. The adoption of this workaround technically violated nursing charting principles and put them in ethically untenable positions. Conclusions: Documenting compliance of the SSC constituted a moral hazard, constrained nurses' autonomy and moral agency, and obscured poor checklist adherence. The findings highlight how local and extra local texts, technologies and relations create ethical issues, raise questions about the effectiveness of resulting data for decision-making and contribute to ongoing conversations about nursing workarounds. [ABSTRACT FROM AUTHOR]

This paper addresses one of the key challenges in the China Railway Express (CR Express) service industry, which is the asymmetry of information between the government and a CR Express operator. We formulate the CR Express service delivery problem with asymmetric information and other unique characteristics as the incentive compensation problem via the principal-agent approach. This is the first paper to develop an incentive-compatible (IC) compensation mechanism to improve CR Express service in the presence of adverse selection and moral hazard. Compared to the generic form of compensation, this paper proves that such an IC scheme with a linear compensation contract is optimal. Our optimal compensation mechanism provides a "positive incentive", where the monetary compensation is higher for the CR Express operator with lower operating costs, as opposed to the current compensation policy, which can create a "negative incentive". We find both underestimation and underinvestment problems, which become smaller when the CR Express operator's gross margin is relatively high. When the CR Express service level is discrete-valued, it is optimal to adopt a fixed compensation scheme. Finally, in the scenario with multiple CR Express operators, we propose a generalized Vickrey (GV) auction, which implicitly obtains both true gross margin and service level. The compensation offered by the government is indeed negative in the case of GV auction. Surprisingly, in this scenario, we find problems of both underestimation and overestimation. • This is first paper on compensation mechanism for government and logistics providers. • A novel generalized Vickrey auction can induce providers to tell true information. • The proposed compensation mechanism extends existing principal-agent theory. • Some interesting economic and managerial insights are given. [ABSTRACT FROM AUTHOR]

We study the impact of pre-contractual communication on market outcomes when economic relationships are subject to hidden action. Our experiment is framed in a credit market context and borrowers (second movers) can communicate with lenders (first movers) prior to entering the credit relationship. Communication reduces moral hazard (strategic default) and increases trust (credit provision) in an environment where opportunistic behavior by borrowers is revealed ex-post to lenders. By contrast, in an environment where strategic defaults are hidden behind a veil of uncertainty, we find a substantially weaker impact of communication. Borrowers are more likely to renege on repayment promises when they can hide opportunistic behavior from lenders. As a consequence, lenders extend less credit to borrowers who promise to repay. Hidden action undermines the positive effect of communication on market outcomes. Our findings have implications for the design of contracts and how to structure relationships with a risk of hidden action: for pre-contractual communication to unfold its full potential it needs to go hand-in-hand with post-contractual monitoring. [ABSTRACT FROM AUTHOR]

This study explores the association between risk retention by originators (skin in the game) and the performance of securitized assets. We combine hand-collected and publicly available data on 85 Brazilian receivable funds with a single originator from January 2013 to December 2020. We find that skin in the game is a buffer against observable risks in accordance with the buffer hypothesis, although the reputation of originators that are financial institutions in the loan market can alleviate moral hazard concerns. For funds with fintech originators, the opposite holds: enhancements are indeed a signal against the unobservable quality of receivables. [ABSTRACT FROM AUTHOR]

We investigate the risk of claims using hazard models for house insurance for the three periods: prior to, during and after the financial crisis. The present study is based on the data provided by Property & Casualty Carrier for the Canadian Market. The semiparametric Cox proportional hazard model results suggest that Canada's house insurance options (Bronze, Silver, Gold, and Platinum) influence the risk of claims. The smaller coverage option, Bronze, has much fewer claims than the complete coverage option, Gold. This may suggest the presence of a moral hazard problem. The financial crisis however impacted the role of the type of coverage had on the risks of claims reducing the moral hazard problem, after controlling for the characteristics of the houses. [ABSTRACT FROM AUTHOR]

“Moral hazard” links geoengineering to mitigation via the fear that either solar geoengineering (solar radiation management, SRM) or carbon dioxide removal (CDR) might crowd out the desire to cut emissions. Fear of this crowding-out effect ranks among the most frequently cited risks of (solar) geoengineering. We here test moral hazard versus its inverse in a large-scale, revealed-preference experiment (n ~ 340,000) on Facebook and find little to no support for either outcome. For the most part, talking about SRM or CDR does not motivate our study population to support a large US environmental non-profit’s mission, nor does it turn them off relative to baseline climate messaging, except when using extreme messengers and framings. Our results indicate the importance of actors and reasoned narratives of (solar) geoengineering to help guide public discourse. [ABSTRACT FROM AUTHOR]

This work investigates a robust optimal dynamic reinsurance problem for an ambiguity averse insurer (AAI) concerned about potential ambiguity of claim intensity. The study aims to determine a robust optimal reinsurance contract to minimize the discounted ruin probability imposed a penalization owing to model ambiguity, including discounting for the time of ruin. We suppose that the surplus process is modeled by a diffusion model. The AAI purchases reinsurance from the reinsurer to manage risk, subject to the incentive compatibility constraint, which rules out moral hazard. Moreover, the reinsurance premium is calculated based on the mean-RVaR premium principle, which generalizes the expected value premium principle and the mean-CVaR premium principle and reflects the different risk preferences of reinsurers. Based on the dynamic programming approach, we obtain the value function and optimal reinsurance policies (the dual excess-of-loss reinsurance). Finally, we show a numerical example to illustrate the effects of premium and ambiguity averse on the discounted ruin probability and the robust optimal contract. [ABSTRACT FROM AUTHOR]

Does health expenditure decentralization improve a nation's health? Should countries care about governance quality when they decentralize healthcare spending to local governments? We answer these questions using cross-country data comprising fifty countries from 1996 to 2018. We find that health spending decentralization worsens health outcomes, which are offset by better governance of government. We calibrate the maximum feasible degree of health expenditure decentralization to have positive effects on health outcomes for a given percentile distribution of governance quality. Countries should be mindful of this negative consequence of health spending decentralization and should ensure that the quality of their governance exceeds a certain threshold to offset this negative externality. We also find that vertical fiscal imbalance is negatively associated with health outcomes, underscoring the role of revenue decentralization in improving the fiscal discipline of local governments by avoiding moral hazard caused by soft budget constraints and the common pool problem. [ABSTRACT FROM AUTHOR]

Two principals with heterogenous budgets compete to buy the best agent (the winner). First, the principals make initial offers to the agents before the winner is known. Then, if the winner has not accepted any offer, the principals make a second round of offers after the winner is revealed. In equilibrium, the principal with the higher budget offers her entire budget to the winner after he is revealed. The principal with the lower budget makes an offer to one agent before the winner is revealed. The timing of offers favors the high-budget principal: the low-budget principal faces adverse selection because only an agent with a low win probability accepts her offer. Moreover, the probability that the high-budget principal buys the winner increases with the number of agents. Finally, limiting pre-revelation offers favors the high-budget principal, while the opposite is true for post-revelation limits. [ABSTRACT FROM AUTHOR]

Surgical regret often experienced at times of a great loss may cause a surgeon to reflect on their practice and intraoperative decision-making. It is inevitable that in the surgical profession, both in training and practice, a surgeon's decisions will be questioned by themselves, peers, and possibly patients. Here, we explore a case of living donor kidney donation in which the surgeon chooses to discontinue the operation for an incidental finding. Ultimately, this is against the patient's wishes and a decision over which both the surgeon and patient experience moral hazard and regret. This article explores surgical regret from the lens of an altruistic donor case and a surgeon's inaction, discussing the ethics of the operative decision-making and surgeon's viewpoint intra- and post-operatively. [ABSTRACT FROM AUTHOR]

This paper uses game-level Major League Baseball data to identify whether players with greater job security shirk in their preparation between games. Past work has identified evidence of moral hazard arising in multiyear Major League Baseball player contracts, but little work has been done in identifying when shirking takes place. Using a difference-in-differences estimation strategy, this study finds evidence of an inverse relationship between the number of years remaining on player contracts and performance when the player is playing on short rest, when opportunity to rest is scarce, but not on long rest. Using a triple-difference specification, evidence is found that this inverse relationship between years remaining on a player's contract when playing on short rest occurs for games played in "party cities." This evidence would suggest that between game preparation is one avenue through which players on multiyear contracts shirk. [ABSTRACT FROM AUTHOR]

We study 33 Chinese banks from December 2009 to December 2020 to examine the moral hazard behavior of Chinese banks from the perspective of nonperforming loans (NPLs). The results show that banks with low returns are more likely to engage in risk-taking behavior and have a high number of NPLs. The government could adopt regulations that would help joint stock banks to be more prudential and encourage city and rural banks to take more risks. [ABSTRACT FROM AUTHOR]

Employees often report being overloaded with routine tasks, which distracts them from more demanding and rewarding work. We analyze this in a multitasking model involving a verifiable routine task and a skill-dependent task characterized by moral hazard. Multitasking is costly so that high- and low-skilled employees specialize, and only employees with intermediate productivity handle both tasks. In the Nash bargaining solution of contract negotiations, work overload in the routine task is used to lower the informational rent from the non-verifiable task. Compared to the first-best solution, more employees perform both tasks and effort in the routine task is inefficiently large. Moreover, the payment structure is such that the employee would prefer to allocate more effort to the demanding task, which we interpret as a loss of control over work autonomy. Reducing employees' bargaining power exacerbates the problem, while the effects of improved monitoring are mixed. [ABSTRACT FROM AUTHOR]

Private military companies (PMC) offer combat and training services and can have considerable advantages for the client on the one hand, but on the other hand it is hard for the client to exercise effective external governance. Using tools of New Institutional Economics, we analyse the relationship between the PMC and the client and show that effects like adverse selection, moral hazard and supply induced demand are detrimental to the client. We derive approaches from the theory to solve the identified problems. With the help of a comparative case study (Wagner Group in Syria and Gurkha Security Guards in Sierra Leone), the insights gained are tested and put into perspective. It turns out that there must be an effective military or economic threat potential in particular in order to achieve good behaviour on the part of the PMC. In this way, we expand the insights of successful monitoring private providers of military force from the client's point of view. [ABSTRACT FROM AUTHOR]

Background: Despite universal health insurance, South Korea has seen a sharp increase in the number of people enrolled in supplemental private health insurance (PHI) during the last decade. This study examined how private health insurance enrollment affects medical expenditure and health service utilization. Methods: Unbalanced panel data for adults aged 19 and older were constructed using the 2016–2018 Korea Health Panel Survey. Quantile regression for medical cost, and quantile count regression for health service utilization were utilized using propensity score-matched data. We included 17 variables representing demographic, socioeconomic, and health information, as well as medical costs and use of outpatient and inpatient care. Results: We discovered that PHI enrollees' socioeconomic and health status is more likely to be better than PHI non-enrollees'. Results showed that private health insurance had a greater effect on the lower quantiles of the conditional distribution of outpatient costs (coefficient 0.149 at the 10th quantile and 0.121 at the 25th quantile) and higher quantiles of inpaitent care utilization (coefficient 0.321 at the 90th quantile for days of hospitalization and 0.076 at the 90th quantile for number of inpatient visits). Conclusions: PHI enrollment is positively correlated with outpatient costs and inpatient care utilization. Government policies should consider these heterogeneous distributional effects of private health insurance. [ABSTRACT FROM AUTHOR]

This article analyses the effect of ministers' exposure to periods of low presidential approval in Brazil and Chile between 1990 and 2014. Approval is explored with quarterly estimates using a dyad-ratios algorithm and merged into a time-dependent cabinet data set to evaluate individual ministerial terminations (N = 4245). The empirical strategy combines time-varying exposure Cox regressions with observational data and propensity score and matching to estimate the effect of low approval on ministerial survival and perform a moderation analysis with three profiles associated with presidential strategies: (1) nonpartisan ministers to limit agency loss and moral hazard; (2) economists as ministers to optimise cabinet performance and send positive signals to the electorate; and (3) party leaders as ministers to optimise legislative support. The main findings show that risk increases by 135.1% in periods of low approval. In addition, approximately only one in five nonpartisan ministers is removed compared to party members. [ABSTRACT FROM AUTHOR]

This is a Gilles Deleuze-based perspective on the 'games businesses play,' many of which are ethically unsound and have implications for ways that consulting practices are dissected. Two types of Deleuze's time (Chronos & Aion) are applied to illustrate the genesis of these moral hazards. Chronos, or linear time, includes past and future timelines ad infinitum. Aion, a type of cyclical time, repeatedly slices through Chronos time. Aion is neither linear or cyclical, but dances with Chronos. Consequently, two types of interrelated observer effects are theorized. The first effect, games of chance, or what Boje calls 'bets on the future,' epitomizes everyday aspects of the process of strategizing. Each bet changes the nature of the past. The second effect, found in Deleuze's works, underscores the importance of "now." We then introduce ways these two temporal effects can be utilized for ethical consulting practices. Essentially, this article addresses a novel storytelling method that can expose unethical business practices, leadership, and behavior through ethical consulting. These storytelling methods are germane to organization development because organizations that degrade others also degrade themselves, which has profound business and societal consequences. [ABSTRACT FROM AUTHOR]

Proxy warfare, in which one party uses a third party to achieve its own goals, are known for centuries, however, the conceptualization studies of proxy warfare are relatively new. Thereby, in this paper, we assess proxy warfare in terms of agency theory. According to agency theory, the owner of the company delegates their authority to another person (agent) to make decisions on their behalf. If there is information asymmetry between the parties or differentiation in the goals of the principal and the agent or they have different risk-sharing perceptions, agency problem exists. This study discloses that identical problems are common in proxy warfare. That is, if the principal and proxy have unmatching goals or desires accompanying information asymmetry and different risk perceptions, the principal may lose control of the proxy or the principal may exploit the proxy, likewise, the proxy may prefer a different way of action which is not compatible with the goals of the principal. However, this study shows that the remedies for agency theory's "moral hazard" and "adverse selection" problems might be used in proxy warfare problems by establishing outcome-based contracts and a strong knowledge structure between the parties of proxy warfare. [ABSTRACT FROM AUTHOR]

There are two opposing welfare effects of market power in a model with monopolistic competition, loan defaults and moral hazard. The loss of output produced if firms set a higher mark‐up over marginal costs confronts with some gain due to higher expected profits and the reduction of defaults. Such tradeoff results in an optimal level of market power that decreases with the efficiency of liquidation following default on a loan. If moral hazard is pervasive, credit rationing cuts down the default rates and mitigates the welfare cost of financial frictions. [ABSTRACT FROM AUTHOR]

We study how a principal with an outside option optimally delegates information acquisition to an agent in a parsimonious environment in which the principal can observe neither the agent's effort nor signal realizations. When the principal chooses an outside option, the true state is not revealed and thus not contractible. We precisely characterize an optimal contract for the principal, illustrating how to construct an optimal contract. [ABSTRACT FROM AUTHOR]

This paper studies the optimal duration of unemployment insurance (UI) benefits in a job search model where a risk neutral UI agency cannot monitor the search effort of risk-averse workers. Unemployment assistance benefits for noneligible unemployed are taken as exogenous by the unemployment agency which chooses optimally the constant level of UI benefits, the date of their exhaustion and the constant level of the financing tax. So, due to possible finite values of the duration of unemployment benefits, the resulting agency's problem involves nonstationarities that appears somewhat difficult to solve from the analytical viewpoint. Based upon the geometric properties of the incentive and budget constraints, we successfully provide two explicit sufficient conditions regarding the parameters of the model for obtaining a positive and finite optimal duration of UI. We then give a theoretical rationale for most unemployment insurance systems. • Optimal unemployment insurance in a nonstationary job search model. • Study of geometric properties of the set of constraints to circumvent nonstationary complexities. • Sufficient conditions for finite optimal duration of unemployment benefits. [ABSTRACT FROM AUTHOR]

• Analysis of several factors that may be behind an undue extension of the injured worker's recovery time. • Comprehensive empirical analysis of more than 400,000 non-fatal work accidents in manufacturing industries. • Women, workers with more seniority, higher wages, and those employed in larger companies take longer to return to work after an occupational injury. • The duration of sick leave for immigrant workers is lower than for native-born workers. • Improving working conditions and supervision mechanisms during the recovery process is recommended to increase attendance motivation and reduce moral hazard exposure. Introduction : Despite the significant economic impact of occupational injuries on companies and society, studies focused on analyzing the determinants of workdays lost due to sick leave remain scarce and incomplete. This paper contributes to this issue by (a) analyzing the drivers of sick leave duration, distinguishing factors that explain the health recovery time from those that could lead workers to a voluntary extension of the absence period, and (b) formulating and empirically testing the effect of gender, citizenship, temporary work, job tenure, amount of disability benefit, and size of the injured worker's firm on the number of days the employee is off work after the injury. Method: Hypotheses are tested on a comprehensive dataset that includes all nonfatal occupational injuries causing sick leave that occurred in the manufacturing sector in Spain during 2015–2019, with more than 400,000 injuries. We conduct ordinary least squares and count data regression models in which the number of days off work is regressed on employees and work characteristics while accounting for a set of variables to control the injury's nature and severity. Results: The results show that after considering the intrinsic characteristics of the injury and the severity of the worker's injuries, women, native workers, workers with more seniority, workers with higher salaries, and those working in larger companies have longer periods of sick leave. The results suggest that moral hazard considerations significantly impact the time to return to work after an occupational injury. Practical applications: Based on the findings, several insights for company managers and public decision-makers are discussed. Specifically, interventions aimed at improving the organization of work and the working conditions of workers in manufacturing industries are highlighted, as well as the need to improve control and supervision mechanisms during the recovery process of injured workers. [ABSTRACT FROM AUTHOR]

Governments involved in civil wars often seek to shape foreign perceptions of the conflict and of the government's role in the conflict. To this end, for example, many such governments have engaged in public diplomacy campaigns (PDCs) in the United States since the end of the Cold War. Specifically, these governments have hired US public relations (PR) and lobbying firms to present favorable narratives of themselves and their role in the conflict. Through PDCs, governments seek to shape US public pronouncements about the governments and the conflict itself. Are PDCs effective tools to reach this goal? We argue that the effect of PDCs is divergent. PDCs help mobilize both supporters and opponents of the sponsoring governments. In so doing, PDCs increase both positive and negative public statements from US officials toward the civil war government. We compile data on PDCs in the United States since the end of the Cold War. Our results have implications for research on foreign influence in foreign policy, combatants' moral hazard, and international norms about combatant behavior. Moreover, in order to gauge the influence of foreign actors on domestic narratives of civil wars, it is crucial to consider how such foreign actors can indirectly shape the discourse around conflict by mobilizing domestic factions. [ABSTRACT FROM AUTHOR]

Although the Bankruptcy Code is facially neutral, the consumer bankruptcy discharge provisions produce anomalies that run counter to bankruptcy’s internal principles of not forgiving debt that is based on misconduct or that implicates a public policy concern. For example, the discharge provisions allow some individuals to discharge debt that stems from civil rights violations or tortious discrimination. In contrast, the Bankruptcy Code precludes some debtors from debt relief based on narrow views of misconduct or misconceptions about moral hazards. These individuals who file for bankruptcy owe debts that generally cannot be forgiven, like civil and criminal fees and fines and student loans. These loans are not always debts that stem from the debtor’s misconduct or involve a moral hazard, but they still fit within this punitive classification of nondischargeable debt. This Article adds to existing consumer bankruptcy scholarship by arguing that the anomalies in the bankruptcy nondischargeability provisions create unintended costs that are borne by economically marginalized individuals. The Bankruptcy Code works at crosspurposes with its internal principles of risk spreading and economic rehabilitation by preventing the discharge of penal debt and student loan debt. The inconsistent treatment of debt follows recognizable racial and socioeconomic lines of vulnerability and marginalization. To remedy these inconsistencies, this Article proposes targeted reforms to the bankruptcy discharge system and reintroduces the question of whether there should be nondischargeable debts. [ABSTRACT FROM AUTHOR]

Negotiations with organized crime groups occur more often than realized, and raise complex questions of ethics, practice and policy. Currently, law provides few incentives for States to choose the path of negotiation, and thus the political costs and moral hazards remain very high and a mano dura ("firm hand") approach prevails. This paper examines some of the challenges faced by those who in good faith might initiate or participate in negotiations with such groups, offering an assessment of how those challenges can be mitigated and an inquiry, in particular, into how law and policy might be improved or reimagined to make such negotiation more feasible and effective in contexts of armed conflict or other situations of violence. [ABSTRACT FROM AUTHOR]

Nurse Ethicists bring a unique perspective to clinical ethics consultation. This perspective provides an appreciation of ethical tensions that will exist beyond the consult question into the moral space of patient care. These tensions exist even when an ethically preferable plan of action is identified. Ethically appropriate courses of action can still lead to moral dilemmas for others. The nurse ethicist provides a lens well suited to identify and respond to these dilemmas. The nurse–patient relationship is the ethical foundation of nursing practice and this relational ontology is well suited to addressing ethical dilemmas that exist prior to and beyond the initial consult question. This paper will describe one nurse ethicist's phronetic and pragmatic approach to a clinical ethics consult elucidated through feminist ethics and systems thinking. This paper will describe the theoretical basis for this method, present a case, and describe how this consultation approach provides a rich analysis based around relationships and responsibilities that also highlights the important ethical tensions within the social structure that exists around the patient and continue after the consult question is answered. [ABSTRACT FROM AUTHOR]

This article examines how financially precarious Canadians face particular challenges to accessing the benefits of employment insurance and personal insolvency because these two systems include features designed to guard against moral hazard. However, these design features do not adequately account for how an increasing number of Canadians are precariously employed and precariously indebted. This article synthesizes the research on precarious employment in Canada, and uses it to suggest how one might conceptualize precarious indebtedness. It then traces how the Canadian employment insurance and personal insolvency systems treat characteristics of financial precarity as evidence of misconduct. As a result, precariously employed and indebted Canadians have difficulty accessing income supports and debt relief. These cascading barriers compound the economic hardship of financially precarious Canadians—a result that is inhumane, inequitable, economically counterproductive, and politically destabilizing. [ABSTRACT FROM AUTHOR]

We consider a moral hazard problem with multiple principals in a continuous-time model. The agent can only work exclusively for one principal at a given time, so faces an optimal switching problem. Using a randomized formulation and techniques from the theory of backward SDEs, we manage to represent the agent's value function and his optimal effort by an Itô process. This representation further helps to solve the principals' problem in case we have infinite number of principals in the sense of mean field game. Finally, to justify the mean field formulation, we develop the so-called backward propagation of chaos, which may carry independent interest itself. [ABSTRACT FROM AUTHOR]

Algorithms are expected to radically improve the way businesses operate. To fully realize these benefits, customers have to accept the algorithmic implementations. Accuracy is a critical component of algorithmic acceptance models. However, thus far, research into accuracy has been limited to user ratings of the accuracy of the algorithmic output despite strong evidence for customer (user) acts of embellishment and other moral hazards. This article aims to deepen the understanding of accuracy ratings by assessing the impact of variation in user input accuracy on the accuracy ratings of the algorithm’s ultimate response. Drawing on honesty, a survey was presented to 500 individuals on the Cloud Research platform. The quantitative analysis showed that the more inaccurately a user felt and behaved, the more accurately they rated the algorithmic response of ‘decline’, with contextual accuracy factors explaining up to 35% of the variation in ratings of the algorithm’s accuracy. This finding raises important implications for researchers and practitioners who want to improve algorithmic acceptance but may have limited their improvement focus to explainability or model accuracy without considering the user behavior. Algorithmic accuracy ratings and acceptance should be evaluated in the context of the user and their likelihood to provide inaccurate inputs. [ABSTRACT FROM AUTHOR]

We analyze a principal-agent model with moral hazard where the principal is risk neutral while the agent is risk averse or risk neutral. The agent is free to choose any probability distribution over outcomes, where some distributions require more effort than others. The agent's effort-cost function is of "Legendre type" and satisfies an axiom of invariance under mergers of outcomes that are equally paid by the principal. We analyze a family of such effort-cost functions. For a canonical subclass of these, and arbitrary outcome spaces, the principal's contract problem allows for closed-form solutions. Optimal contracts then combine debt with a monotonic sharing rule for the surplus above a threshold chosen by the principal. When the agent is risk neutral, the contract boils down to a pure debt contract. For agents with unit degree of relative risk aversion, the surplus is divided in fixed shares. [ABSTRACT FROM AUTHOR]

Background: To address concerns over the financial stability of South Korea's National Health Insurance (NHI) programme, the government transitioned from an outpatient copayment system to a coinsurance system in 2007. This policy aimed to reduce healthcare overutilization by increasing patients' financial responsibility for outpatient services. Methods: Using comprehensive data on NHI beneficiaries, this study employs a regression discontinuity in time (RDiT) design to assess the policy's impact on outpatient healthcare utilization and expenditures. We focus on changes in overall outpatient visits, average healthcare cost per visit and total outpatient healthcare expenditures. Results: Our findings indicate that the transition from outpatient copayment to coinsurance led to a substantial increase in outpatient healthcare utilization (up to 90%) while decreasing medical expenditures per visit by 23%. The policy shift incentivized beneficiaries to seek more medical treatments during the grace period and enroll in supplemental private health insurance, which provided access to additional medical services at lower marginal costs. Conclusions: The policy change and the emergence of supplemental private insurance contributed to moral hazard and adverse selection issues, culminating in South Korea becoming the country with the highest per capita utilization of outpatient health services worldwide since 2012. This study underscores the importance of carefully considering the unintended consequences of policy interventions in the healthcare sector. [ABSTRACT FROM AUTHOR]

This article focuses on the risk that work disability policies lock people into work disability rather than promote durable health and return to work. We outline the concept of a work disability trap as a heuristic device to explore this policy paradox inherent in the design of most social insurance systems. This is a conceptual paper drawing on examples from existing research. We identify three manifestations of the disability trap: not overcoming disability; underperforming; and returning to work prematurely. The causes of these manifestations are identified as structural rather than based on malingering clients, while negative consequences are identified both on client and system levels. We emphasize the need for systems built on trust and reasonable expectations, and the need for providing rehabilitation support independently of economic compensation. Universal basic income is introduced as a potential tool to ameliorate some of the consequences of the disability trap. Compensation systems focusing too prominently on early return to work may have counter-productive effects on rehabilitation. Overly suspicious assessment systems nurture a view of people as malingerers. Rehabilitation professionals need to be attentive to system-generated effects which may prevent overcoming work disability. [ABSTRACT FROM AUTHOR]

This paper studies optimal Public Private Partnerships contract between a public entity and a consortium, with the possibility for the public to stop the contract. The public ("she") pays a continuous rent to the consortium ("he"), while the latter gives a response characterized by his effort. Usually, the public cannot observe the effort done by the consortium, in addition, the law of the Agent's effort which affects the distribution of the total output is to be chosen over a set of probabilities, leading to a Principal-Agent problem with moral hazard and Knightian uncertainty characterized by κ -ignorance. Our problem is formulated as a Stackelberg leadership model between the public and the consortium. This problem is solved in three steps. The first one consists on characterizing the worst case, then we derive the Agent's best response. In the third step, we solve the Principal problem by maximizing the social value of the project minus the rent paid, which is a standard stochastic control problem. The public value function is characterized by the solution of an associated Hamilton–Jacobi–Bellman variational inequality. The public value function, the optimal effort and the optimal rent are computed numerically in a feedback form by using the Howard algorithm. We show numerically that each increase in the degree of Knightian uncertainty leads to increase the optimal effort, and decrease the value function. [ABSTRACT FROM AUTHOR]

Political actors often resort to electoral violence to gain an edge over their competitors even though violence is harder to hide than fraud and more likely to delegitimize elections as a result. Existing explanations tend to analyze violence in terms of the same factors as fraud, or to treat violence as a means of last resorts given its overtness. We introduce a novel explanation that does neither, arguing that political actors often use violence for the very reason that it is hard to hide. Its overtness, we argue, allows political actors to observe whether the agents they enlist to manipulate elections for them do so and reduces these agents' likelihood of shirking in turn. We develop our argument through a formal model showing that electoral monitors, by exacerbating problems of moral hazard (shirking), can induce actors to increasingly turn to violence and use process tracing to examine the implications of this model through the example of Egypt. [ABSTRACT FROM AUTHOR]

In this paper, we present a game-theoretic analysis of ransomware. To this end, we provide theoretical and empirical analysis of a two-player Attacker-Defender (A-D) game, as well as a Defender-Insurer (D-I) game; in the latter, the attacker is assumed to be a non-strategic third party. Our model assumes that the defender can invest in two types of protection against ransomware attacks: (1) general protection through a deterrence effort, making attacks less likely to succeed, and (2) a backup effort serving the purpose of recourse, allowing the defender to recover from successful attacks. The attacker then decides on a ransom amount in the event of a successful attack, with the defender choosing to pay ransom immediately, or to try to recover their data first while bearing a recovery cost for this recovery attempt. Note that recovery is not guaranteed to be successful, which may eventually lead to the defender paying the demanded ransom. Our analysis of the A-D game shows that the equilibrium falls into one of three scenarios: (1) the defender will pay the ransom immediately without having invested any effort in backup, (2) the defender will pay the ransom while leveraging backups as a credible threat to force a lower ransom demand, and (3) the defender will try to recover data, only paying the ransom when recovery fails. We observe that the backup effort will be entirely abandoned when recovery is too expensive, leading to the (worst-case) first scenario which rules out recovery. Furthermore, our analysis of the D-I game suggests that the introduction of insurance leads to moral hazard as expected, with the defender reducing their efforts; less obvious is the interesting observation that this reduction is mostly in their backup effort. [ABSTRACT FROM AUTHOR]

This paper examines the impact of a policy reform in a municipality in Norway that extended to workers the right to self-certify sickness absence from work. After the reform, workers were no longer obliged to obtain a certificate from a physician to receive sickness benefits. They could call in sick directly to their line leader and had to engage in a counselling program organized by the employer. To estimate the effect of this reform, we contrast the change in sickness absence among employees who were granted the extended right to self-certify absence with absence among employees who had to obtain a physician's certificate to be entitled to sickness benefits. We use both a standard difference-in-differences method and the synthetic control method to estimate the effect of the reform. We can rule out large positive effects on absence after the reform, with strong evidence that the policy change actually resulted in a reduction in absence for female workers. [ABSTRACT FROM AUTHOR]

Traczykowski, L. 2021: Ethics, Law and Natural Hazards: The Moral Imperative for International Intervention Post-Disaster. London: Routledge. 140 pp. £120 hardcover, £33.29 paperback. ISBN: 9780367808600 (paperback), 9780367407049 (hardcover). [ABSTRACT FROM AUTHOR]