Competitive equilibrium with moral hazard in economies with multiple commodities

Alessandro Citanna; Antonio Villanacci

doi:10.1016/S0304-4068(02)00070-8

Competitive equilibrium with moral hazard in economies with multiple commodities

Alessandro Citanna, Antonio Villanacci

Economics

Research output: Contribution to journal › Article › peer-review

Abstract

We study an economy with competitive commodity markets and exclusive pairwise contractual relations with moral hazard, where both the principal and the agent can be risk averse. We show existence of equilibria and their generic constrained suboptimality, by means of a change in the compensation schemes. Such suboptimality occurs provided the number of commodities is sufficiently large relative to the number of states and pair types, and there are at least three future states of the world.

Original language	English (US)
Pages (from-to)	117-147
Number of pages	31
Journal	Journal of Mathematical Economics
Volume	38
Issue number	1-2
DOIs	https://doi.org/10.1016/S0304-4068(02)00070-8
State	Published - Sep 2002

Keywords

Constrained suboptimality
General equilibrium
Moral hazard

ASJC Scopus subject areas

Economics and Econometrics
Applied Mathematics

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10.1016/S0304-4068(02)00070-8

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title = "Competitive equilibrium with moral hazard in economies with multiple commodities",

abstract = "We study an economy with competitive commodity markets and exclusive pairwise contractual relations with moral hazard, where both the principal and the agent can be risk averse. We show existence of equilibria and their generic constrained suboptimality, by means of a change in the compensation schemes. Such suboptimality occurs provided the number of commodities is sufficiently large relative to the number of states and pair types, and there are at least three future states of the world.",

keywords = "Constrained suboptimality, General equilibrium, Moral hazard",

author = "Alessandro Citanna and Antonio Villanacci",

note = "Funding Information: We thank Piero Gottardi and Heraclis Polemarchakis for helpful discussions. Antonio Villanacci acknowledges the hospitality and financial support of the University of Geneva through an EC fellowship. Copyright: Copyright 2008 Elsevier B.V., All rights reserved.",

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AU - Citanna, Alessandro

AU - Villanacci, Antonio

N1 - Funding Information: We thank Piero Gottardi and Heraclis Polemarchakis for helpful discussions. Antonio Villanacci acknowledges the hospitality and financial support of the University of Geneva through an EC fellowship. Copyright: Copyright 2008 Elsevier B.V., All rights reserved.

PY - 2002/9

Y1 - 2002/9

N2 - We study an economy with competitive commodity markets and exclusive pairwise contractual relations with moral hazard, where both the principal and the agent can be risk averse. We show existence of equilibria and their generic constrained suboptimality, by means of a change in the compensation schemes. Such suboptimality occurs provided the number of commodities is sufficiently large relative to the number of states and pair types, and there are at least three future states of the world.

AB - We study an economy with competitive commodity markets and exclusive pairwise contractual relations with moral hazard, where both the principal and the agent can be risk averse. We show existence of equilibria and their generic constrained suboptimality, by means of a change in the compensation schemes. Such suboptimality occurs provided the number of commodities is sufficiently large relative to the number of states and pair types, and there are at least three future states of the world.

KW - Constrained suboptimality

KW - General equilibrium

KW - Moral hazard

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EP - 147

JO - Journal of Mathematical Economics

JF - Journal of Mathematical Economics

IS - 1-2

ER -

Competitive equilibrium with moral hazard in economies with multiple commodities

Abstract

Keywords

ASJC Scopus subject areas

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