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Nonparametric Identification of a Contract Model With Adverse Selection and Moral Hazard

This paper studies the nonparametric identification of a contract model with adverse selection and moral hazard. Specifically, we consider the false moral hazard model developed by Laffont and Tirole (1986). We first extend this model to allow for general random demand and cost functions. We establi...

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Published in:	Econometrica 2011-09, Vol.79 (5), p.1499-1539
Main Authors:	Perrigne, Isabelle, Vuong, Quang
Format:	Article
Language:	English
Subjects:	Adverse selection Applications Contracts Cost allocation Cost analysis Cost estimates Cost functions Cost structure Demand curves Demand shocks Economic models Equilibrium models Exact sciences and technology Information asymmetry Information economics Insurance, economics, finance Mathematical analysis Mathematics Moral hazard Moral hazard models nonparametric identification Nonparametric models Parametric inference Partial differential equations Probability and statistics Procurement regulation Sciences and techniques of general use Statistics Studies
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container_title	Econometrica
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creator	Perrigne, Isabelle Vuong, Quang
description	This paper studies the nonparametric identification of a contract model with adverse selection and moral hazard. Specifically, we consider the false moral hazard model developed by Laffont and Tirole (1986). We first extend this model to allow for general random demand and cost functions. We establish the nonparametric identification of the demand, cost, deterministic transfer, and effort disutility functions as well as the joint distribution of the random elements of the model, which are the firm's type and the demand, cost, and transfer shocks. The cost of public funds is identified with the help of an instrument. Testable restrictions of the model are characterized.
doi_str_mv	10.3982/ECTA6954
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source	International Bibliography of the Social Sciences (IBSS); Wiley; EBSCOhost Econlit with Full Text; JSTOR Archival Journals and Primary Sources Collection
subjects	Adverse selection Applications Contracts Cost allocation Cost analysis Cost estimates Cost functions Cost structure Demand curves Demand shocks Economic models Equilibrium models Exact sciences and technology Information asymmetry Information economics Insurance, economics, finance Mathematical analysis Mathematics Moral hazard Moral hazard models nonparametric identification Nonparametric models Parametric inference Partial differential equations Probability and statistics Procurement regulation Sciences and techniques of general use Statistics Studies
title	Nonparametric Identification of a Contract Model With Adverse Selection and Moral Hazard
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