TY - JOUR
T1 - Information extraction and norms of mutual protection
AU - Bisin, Alberto
AU - Guaitoli, Danilo
N1 - Funding Information:
Financial support from the Spanish Ministry of Science and Innovation through grant ECO2010-19733 is gratefully acknowledged. The paper was completed while the second author was at the Dept. d’Economia, Universitat Rovira i Virgili. The paper greatly owes to comments from the Editor and an anonymous referee for substantial improvements in the presentation. Thanks to Vittorio Bisin for his help with American slang.
PY - 2012/9
Y1 - 2012/9
N2 - We study a class of moral hazard economies in which a principal interacts with several agents. In these economies first best allocations can be implemented via full information extraction when side-trades between agents can be restricted. When instead side-trades cannot be restricted, the ability of the principal to extract information from the agents is severely hampered. In this context, side-trades take the form of informal contracts which can be directly interpreted as norms of mutual protection, which are indeed quite common among extended family members as well as inside various social, political, and religious groups.
AB - We study a class of moral hazard economies in which a principal interacts with several agents. In these economies first best allocations can be implemented via full information extraction when side-trades between agents can be restricted. When instead side-trades cannot be restricted, the ability of the principal to extract information from the agents is severely hampered. In this context, side-trades take the form of informal contracts which can be directly interpreted as norms of mutual protection, which are indeed quite common among extended family members as well as inside various social, political, and religious groups.
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U2 - 10.1016/j.jebo.2012.07.012
DO - 10.1016/j.jebo.2012.07.012
M3 - Article
AN - SCOPUS:84866274205
SN - 0167-2681
VL - 84
SP - 154
EP - 162
JO - Journal of Economic Behavior and Organization
JF - Journal of Economic Behavior and Organization
IS - 1
ER -