Public Bail-out Projects and Moral Hazard

• 영문명: Public Bail-out Projects and Moral Hazard
• 발행기관: 한국무역연구원
• 저자명: Yang-Seung Lee
• 간행물 정보: 『무역연구』제13권 제3호, 145~156쪽, 전체 12쪽
• 주제분류: 경제경영 > 무역학
• 파일형태: PDF
• 발행일자: 2017.06.30

영문 초록

It often happens that a public bail-out project ends up with ineffective spending. In our opinion, most problems relating to public spending stem from moral hazard or hidden action. Depending on the incentive scheme, the problem can be either exacerbated or reduced. In this paper, we will suggest an incentive scheme for resolving the moral hazard problem from the perspective of strategic information transmission. Prior to the decision of a bail-out project, a government and firms play a game of communication using messages. That is, a firm signals its own capabilities and the government updates its belief of the firm’s true capabilities after receiving the signal. According to our analysis, the game leads to a paradox such that, when a firm is allowed to indirectly indicate its own capability rather than be forced to tell the truth (i.e. confess), total payoffs for both players can be increased in preventing serious moral hazard.

목차

Ⅰ. Introduction

Ⅱ. Public Bail-out Projects

Ⅲ. Dynamic Game under Incomplete Information

Ⅳ. Bail-outs in Equilibrium

Ⅴ. Conclusion

키워드

Incentive Moral Hazard Principal-Agent Relationship Public Spending