Reputation, Product Quality, and Warranties

This paper studies the firm's choice between implicit and explicit contracts as alternative methods of assuring product quality. The relationship between these two contractual forms is studied using a dynamic model with imperfect monitoring and team moral hazard where both the firm and the consumer take unobservable actions that affect product performance. The firm chooses the contractual arrangement that maximizes expected profit. Identified are conditions on the primitive attributes of the transactions and on the firm's environment that can help explain why firms might decide to use explicit contracting, implicit contracting, or a combination of the two. I also show that there are conditions under which the introduction of reputation causes explicit contracts to be more uniform and less sensitive to the details of the transaction than implied by static models.     

经销关系中双边道德风险的一种契约解决机制

对于需要进行专用性资产投资或通过契约安排形成专用性资产投资的经销关系中,往往会存在双边道德风险:一是生产商敲竹杠的道德风险;二是经销商隐蔽行为的道德风险。本文通过一个简单的不完全契约安排试图解决这种双边道德风险,以取得社会最优投资,促使交易的完整进行。     

考虑声誉效应的外包中服务商激励机制

在考虑声誉的情形下,建立一个博弈模型,探讨了外包中服务商激励约束机制的内在机理。分析表明：声誉对服务商激励有重要影响,可以提高服务商在前期的努力程度,在某种程度上,声誉效应能很好地解决来自服务商的道德风险问题。同时,文章还提出了基于服务商声誉的约束机制建设的建议。     

企业道德风险的二元防范分析

本文在阐述企业道德风险含义、产生根源及其危害的基础上,分析了企业道德风险的防范对策。应把激励与监督机制相结合、法律与信誉机制相结合来防范企业道德风险。     

Premium,merger fees and the choice of investment banks: A simultaneous analysis

We analyze 635 US M&A transactions from 1985 to 2004. In contrast with prior research, we distinguish between the target and acquirer fees, and examine their independent effects on the level of the merger premium. The study provides evidence of a positive (negative) association between target (acquirer) fees and the level of the premium. It indicates that the reputation of investment banks affects the level of merger fees, but does not affect the level of the premium. The findings confirm the conflict of interests between target and acquirer firms where the investment banks’ efforts are positively related to shareholders’ interest. The study also finds that when acquirers pay higher fees than target firms, they pay lower premiums. The findings also imply that for the small proportion of mergers (13%) resulting in relatively large value gains for buying firms, an acquirer might be willing to pay large advisory fees even though this may result in a higher premium.     

基于交易金额的在线信誉模型设计和分析

信誉模型是在线信誉体系的一个重要组成部分,本文针对现有信誉模型忽略交易金额的缺陷,结合已有的信任研究成果,构建了基于交易金额的在线信誉模型,并结合真实交易数据比较了现有模型和本模型的优劣之处,以期为在线消费提供用户信誉更全面的评估。     

Transaction Costs in the Trading System of Cashew Nuts in the North of Benin: A Field Study

Cashew nut trading is an activity with growing economic importance in the north of Benin. Among the cost categories supported by the trading actors are transaction costs to which rare empirical studies have been devoted. Therefore, based on the theoretical concept this article empirically analyzes the importance of the transaction costs generated by cashew nut trading in the north of Benin. The empirical data were collected in two villages. Using a paired‐sample T test this study shows that the transaction costs are relatively important, but are not the major cost category. The average “production cost” is higher than the average transaction cost incurred by the trading actors. Although the transaction costs are on average lower than the other costs category, they are viewed by most actors (82 percent) as a serious constraint in the trading system due to moral hazard problems arising from the existence of these costs. By analyzing the specific factors that influence the magnitude of the transaction costs borne by the actors, the article shows that some socio‐cultural and environmental characteristics of the actors are determinant of the level of transaction costs incurred.     

How to Regulate Heterogeneous Hospitals?

In many areas of health care financing, there is controversy over the sources of cost variability and about the respective roles of inefficiency versus legitimate heterogeneity. This paper proposes a payment system that creates incentives to increase hospital efficiency when hospitals are heterogeneous, without reducing the quality of care. We consider an extension of Shleifer's yardstick competition model and apply an econometric approach to identify and evaluate observable and unobservable sources of cost heterogeneity. Moral hazard can be seen as the result of two components: long‐term moral hazard (hospital management can be permanently inefficient) and transitory moral hazard. The latter is linked to the manager's transitory cost‐reducing effort. For instance, he or she can be more or less rigorous each year when bargaining prices for supplies delivered to the hospital by outside firms. The use of a three‐dimensional nested database makes it possible to identify transitory moral hazard and to estimate its effect on hospital cost variability. Econometric estimates are performed on a sample of 7,314 stays for acute myocardial infarction observed in 36 French public hospitals over the period 1994–1997. We obtain two alternative payment systems. The first takes all unobservable hospital heterogeneity into account, provided that it is time invariant, whereas the second ignores unobservable heterogeneity. Simulations show that substantial budget savings—at least 20%—can be expected from the implementation of such payment rules. The first method of payment has the great advantage of reimbursing high‐quality care. It leads to substantial potential savings because it provides incentives to reduce costs linked to transitory moral hazard, whose influence on cost variability is far from negligible. This payment rule could be extended to other areas of health care financing, such as Adjusted Average Per Capita Cost to calculate Medicare Managed Care reimbursements in the United States.     

Examining the Conditional Limits of Relational Governance: Specialized Assets,Performance Ambiguity,and Long‐Standing Ties

abstract Despite recognition of the benefits of relational governance in inter‐organizational exchanges, factors that may erode its value have received little examination. We extend the literature by asking whether self‐interested opportunities and long‐standing ties erode the positive association between relational governance and performance. Consistent with transaction cost and moral hazard logics, exchange hazards, particularly asset specificity and difficult performance measurement, dampen the positive association of relational governance and performance. We further find, consistent with recent inquiries into the dark side of embedded ties that the performance benefits associated with relational governance decline when parties rely on repeated partnerships.     

盈余管理、关联交易与审计师特征

上市公司利用关联交易进行盈余管理必须得到会计师事务所的"配合"才有可能顺利实施,而与之"配合"的审计师因承担更高的审计风险,必以收取更高的审计费用作为补偿.实证研究表明,关联交易是上市公司盈余管理的重要手段,上市公司关联交易量越大,会计师事务所的品牌、规模越有利于抑制公司盈余管理行为,审计任期过长不利于抑制公司盈余管理行为.上市公司关联交易量越大,就越倾向于选择非国际"四大"和国内非"十大"会计师事务所,即小规模会计师事务所是上市公司的选择目标,因盈余管理进行关联交易的上市公司支付了更高水平的审计费用.     

信息不对称对公司治理影响研究

信息不对称增加了交易成本,造成了不对称双方的＂逆向选择＂和＂道德风险＂问题,大大的降低了资源配置的效率。分析了信息不对称对上市公司治理的影响,结合欧美发达国家成熟的公司治理经验,对相关问题提出了对策。     

Moral hazard and the composition of transfers: theory and evidence from cross-border transfers

We study how a donor can use restricted transfers to control the moral hazard behavior of a recipient and how the composition of unrestricted and restricted transfers is adjusted in response to changes in the moral hazard behavior of the recipient. Under certain conditions, our game-theoretic model predicts that the donor reduces the proportion of restricted transfers in total transfers as the moral hazard behavior of the recipient declines. Using foreign aid transfers (i.e., project aid and program aid) and panel data covering the period 1991–2007, we find econometric support for the prediction of the model. Our results suggest that some variables that affect the size of foreign aid may have no effect on the composition of aid.     

Endogenous trading in credit default swaps

We introduce a real options model in order to quantify the moral hazard impact of credit default swap (CDS) positions on the corporate default probabilities. Moral hazard is widely addressed in the insurance literature, where the insured agent may become less cautious about preventing the risk from occurring. Importantly, with CDS the moral hazard problem may be magnified since one can buy multiple protections for the same bond. To illustrate this issue, we consider a firm with the possibility of switching from an investment to another one. An investor can influence the strategic decisions of the firm and can also trade CDS written on the firm. We analyze how the decisions of the investor influence the firm value when he is allowed to trade credit default contracts on the firm’s debt. Our model involves a time-dependent optimal stopping problem, which we study analytically and numerically, using the Longstaff–Schwartz algorithm. We identify the situations where the investor exercises the switching option with a loss, and we measure the impact on the firm’s value and firm’s default probability. Contrary to the common intuition, the investors’ optimal behavior does not systematically consist in buying CDSs and increase the default probabilities. Instead, large indifference zones exist, where no arbitrage profits can be realized. As the number of the CDSs in the position increases to exceed several times the level of a complete insurance, we enter in the zone where arbitrage profits can be made. These are obtained by implementing very aggressive strategies (i.e., increasing substantially the default probability by producing losses to the firm). The profits increase sharply as we exit the indifference zone.     

Preliminary evidence on the appointment of institutional solutions to franchisor moral hazard—the case of franchisee councils

Besides franchisee opportunistic behavior, franchisor moral hazard is a central concern in franchise chains. Economic literature thus far focused on the sharing of franchisee revenues as an incentive for curbing franchisor malfeasance. In this paper, we ask whether and how the obligations of chains may be enforced through institutional arrangements like franchisee councils. Consistent with expectations, the appointment of a council empirically turned out to be more likely as decision rights—a proxy for the scope of moral hazard—were increasingly allocated to companies' management. We found this relationship to be negatively moderated by the contractual share parameter. Copyright © 2007 John Wiley & Sons, Ltd.     

Optimal securities under adverse selection and moral hazard

We consider project financing under adverse selection and moral hazard and derive several interesting results. First, we provide an explanation of why good firms issue both debt and underpriced equity (even if the bankruptcy and agency costs of debt are zero). Second, we show that, in the presence of moral hazard, adverse selection may induce the conversion of negative into positive NPV projects leading to an improvement in social welfare. Third, we provide a rationale for the use of warrants. We also show that a debt–warrant combination can implement the optimal contract. Our results have a number of testable implications.     

Factors explaining shared clothes consumption in China: Individual benefit or planet concern?

Shared clothes represent one example of the sharing economy whereby users provide a variety of clothes to people at fees representing mutual value through online platforms. Sharing creates a more circular economy and represents one form of sustainable consumption. Many studies have proposed environmental concern as a key influencer of customer intention and behaviour, yet other motivations may be driving sustainable consumption behaviours such as sharing clothes. This study aims to expand our understanding of shared clothes in line with attitude–intention–behaviour theory. The aim is to examine the moderating role of environmental concern in the relationship between perceived economic, functional (app quality/platform) benefit, reputation and trust of the app/platform on (a) intention to use online clothes‐sharing platforms and (b) spending behaviour of current users of the same sharing platform. A total of 250 and 232 usable questionnaires were gathered from potential and current users of shared clothing. Results reveal that environmental concerns are higher for current users when compared with potential users of the sharing platform. Results of this study identify that personal considerations such as economic benefit outweigh environmental considerations for shared clothes consumers. Practical implications, limitations, and future directions are highlighted.     

Supply chain finance and impacts of consumers’ sustainability awareness

Several new methods have been proposed for supply chain finance (SCF) with bank credits, but none of them mentions how to solve the borrowers’ moral hazard problems in SCF. This paper examines the moral hazard problem in supply chain financing with procurement contract (or purchase order). We show that since supply chain is an up-down directed structure, when financing with the procurement contract, the supplier’s effort monitoring task can be rendered to the procurement contract, which can secure the supplier’s optimal effort and capital choices in production. Hence, compared to separate lending, the supplier’s credit rationing problem can be mitigated, and most importantly, banks’ under-estimation on the supplier’s default risk and the over-estimation on the retailer’s default risk will both decrease. We further show that the retailer’s corporate social responsibility expenditure can increase consumers’ brand recognition, thus when facing demand shocks arising from consumer’s unexpected concerns, the retailer can better stabilize the firm value.     

Health Insurance, Moral Hazard, and Managed Care

If an illness is not contractible, then even partially insured consumers demand treatment for it when the benefit is less than the cost, a condition known as moral hazard. Traditional health insurance, which controls moral hazard with copayments (demand management), can result in either a deficient or an excessive provision of treatment relative to ideal insurance. In particular, treatment for a low-probability illness is deficient if illness per se has little effect on the consumer's marginal utility of income and if the consumer's price elasticity of expected demand for treatment is large relative to the risk-spreading distortion when these are evaluated at a copayment that brings forth the ideal provision of treatment. Managed care, which controls moral hazard with physician incentives, can either increase or decrease treatment delivery relative to traditional insurance, depending on whether demand management results in deficient or excessive treatment.     

The Social Cost of Cheap Pseudonyms

We consider the problems of societal norms for cooperation and reputation when it is possible to obtain cheap pseudonyms, something that is becoming quite common in a wide variety of interactions on the Internet. This introduces opportunities to misbehave without paying reputational consequences. A large degree of cooperation can still emerge, through a convention in which newcomers "pay their dues" by accepting poor treatment from players who have established positive reputations. One might hope for an open society where newcomers are treated well, but there is an inherent social cost in making the spread of reputations optional. We prove that no equilibrium can sustain significantly more cooperation than the dues-paying equilibrium in a repeated random matching game with a large number of players in which players have finite lives and the ability to change their identities, and there is a small but nonvanishing probability of mistakes. Although one could remove the inefficiency of mistreating newcomers by disallowing anonymity, this is not practical or desirable in a wide variety of transactions. We discuss the use of entry fees, which permits newcomers to be trusted but excludes some players with low payoffs, thus introducing a different inefficiency. We also discuss the use of free but unreplaceable pseudonyms, and describe a mechanism that implements them using standard encryption techniques, which could be practically implemented in electronic transactions.     

Market Uncertainty and Socially Embedded Reputation

Both economists and sociologists generally recognize the importance of reputation in coordinating economic transactions. In a perfectly competitive and anonymous market characterized by faceless buyers and sellers, the issue of reputation would be irrelevant and unnecessary. In reality, however, markets are often filled with varying degrees of information asymmetry, which can threaten the very existence of the market system itself. In critical reaction to the standard neoclassical model, some economists, on the one hand, argue that when there is an information problem, reputation serves as a valuable source of market signal of quality. Sociologists of economic life similarly contend that reputation, along with trust, is critical in lowering transaction costs and thereby facilitating various economic activities among individual actors. The purpose of this article is to apply this broad theoretical observation to a specific empirical phenomenon. It does so by highlighting the role of social networks that connect actors on both demand and supply sides of the market. Specifically, this study examines how interpersonal networks in the market for legal services affect the duration of ties between buyers and sellers. Quantitative analysis based on a random sample of Chicago lawyers, a project funded by the American Bar Foundation, reveals that ceteris paribus the lawyer-client relations are significantly driven by social network factors.