Pooling promises with moral hazard.

Authors
Publication date
2015
Publication type
Journal Article
Summary We extend the framework of Dubey and Geanakoplos (2002) to the case of moral hazard. We analyze the equilibrium properties of the model and we show that equal ex-ante consumers may choose to promise differently, and, as a consequence, choose different actions. This illustrates how the pool of voluntary promises can induce redistribution from consumers with high expected endowment to those with low expected endowment.
Publisher
Economics Bulletin
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