Article
Business
Yanfen Zhang, Qi Xu, Guoqing Zhang
Summary: Live streaming commerce is gaining popularity as a new online selling channel and creating a vast market worth. However, the cooperation between brand suppliers and streamers may not always achieve a win-win situation due to moral hazard and adverse selection problems. To address this, incentive contracts were designed based on game models to investigate price discount decisions in a live streaming commerce supply chain. The findings showed that high-influence streamers have unavoidable information rent, and brand suppliers can obtain more benefits by cooperating with them and offering low-price discounts.
JOURNAL OF RETAILING AND CONSUMER SERVICES
(2023)
Article
Operations Research & Management Science
J. F. F. Almeida, S. V. Conceicao, L. R. Pinto, B. R. P. Oliveira, L. F. Rodrigues
Summary: This paper proposes a change in the traditional approach of sales and operations planning for integrated steel industries, with a two-stage stochastic programming model showing potential improvement of about 15% on overall supply chain profit. The model highlights the need for interaction of the sales team with procurement, production, and distribution teams.
ANNALS OF OPERATIONS RESEARCH
(2022)
Article
Economics
Yao-Tung Chen, Sheng-Chang Peng
Summary: Based on data from an anonymous but renowned life insurance company in Taiwan, this paper uses R programming language to conduct a big data analysis, validating the existence of information asymmetry in medical insurance and drawing meaningful conclusions.
Article
Economics
David Powell, Dana Goldman
Summary: Moral hazard and adverse selection create inefficiencies in private health insurance markets. Understanding the relative importance of each factor is critical for addressing these inefficiencies. By using claims data, the study shows adverse selection plays a significant role in the distribution of medical expenditures.
JOURNAL OF ECONOMETRICS
(2021)
Article
Business, Finance
Jin Wang, Rui Li
Summary: This paper examines the impact of asymmetric information on P2P lending in China. The findings indicate that default rates increase significantly with interest rates, particularly when borrowers choose rates above the legal maximum. The absence of interest rate caps contributes to the market failure of Chinese P2P lending due to adverse selection. However, there is no strong evidence to support the moral hazard effect on interest rates and loan size. Additionally, credit scoring based on applicant characteristics can help mitigate, but not eliminate, the problem of asymmetric information.
FINANCE RESEARCH LETTERS
(2023)
Article
Business, Finance
Jin Wang, Rui Li
Summary: This paper investigates the impact of asymmetric information on peer-to-peer lending in China. The study shows a significant increase in default rates with higher interest rates. Borrowers who select interest rates exceeding the legal maximum private lending rate of 15.4% are found to be more likely to default. The absence of interest rate caps to tackle adverse selection contributes to the market failure of Chinese peer-to-peer lending. However, there is no strong evidence of the moral hazard effect on interest rates and loan size. Additionally, credit scoring based on applicant characteristics can partially mitigate the issue of asymmetric information.
FINANCE RESEARCH LETTERS
(2023)
Article
Economics
Daisuke Adachi, Hiroyuki Nakata, Yasuyuki Sawada, Kunio Sekiguchi
Summary: This paper is the first empirical study on adverse selection and moral hazard in the corporate disaster insurance market. By examining a unique plant-level panel dataset on the 2011 Thailand floods, the authors provide evidence of adverse selection and moral hazard in both property and business interruption insurance. The study highlights the importance of considering these risks in the insurance market.
JOURNAL OF ECONOMIC BEHAVIOR & ORGANIZATION
(2023)
Article
Management
Shiyang Huang, Yan Xiong, Liyan Yang
Summary: The study reveals that investors need to spend money to develop skills to process alternative data purchased. The data vendor can influence the precision of the information extracted by investors by controlling the size of the data sample. Costs have different impacts on price informativeness, cost of capital, and return volatility.
MANAGEMENT SCIENCE
(2022)
Article
Management
Tinglong Dai, Rongzhu Ke, Christopher Thomas Ryan
Summary: A firm hires an agent to handle both operational and marketing tasks, and designs a compensation plan to incentivize the agent under demand censoring. The optimal compensation plan resembles a mast and sail structure, leading to potential ex post moral hazard issues due to demand censoring. Incorporating additional information such as a waiting list can mitigate these moral hazard problems.
MANAGEMENT SCIENCE
(2021)
Article
Business, Finance
Michael Sockin, Mindy Z. Xiaolan
Summary: This study examines the consequences of common components in compensation contracts for active fund managers. The commonality in compensation structure and loadings across funds leads to reduced asset price informativeness, amplified distortions from benchmark-hedging demand, and lower risk prices in financial markets. Contract commonality also affects capital allocation, information acquisition, and trading decisions of active managers. From a normative perspective, it increases the rigidity of industry size and performance-based fees. Quantitatively, an increase in asset payoff uncertainty has a larger impact on the Planner's economy compared to the decentralized economy. From a positive perspective, contract commonality undermines the accuracy of several widely used measures of active manager skill.
Article
Management
Felix Papier, Ulrich W. Thonemann
Summary: Sales and operations planning processes are used to align production quantities and customer demand, with demand planning and production planning being key activities. Studying social preferences in incentivizing demand planners, we find that they can effectively motivate demand planners to invest effort, leading to more accurate demand forecasts and increased company profit.
OPERATIONS RESEARCH
(2021)
Article
Economics
Avi Lichtig, Ran Weksler
Summary: This paper studies a bilateral trade model where the distribution of the asset is affected by the seller's pre-trade actions. The analysis shows that the seller exhibits a risk-seeking disposition, and riskier underlying distributions of the asset lead to lower social welfare.
JOURNAL OF THE EUROPEAN ECONOMIC ASSOCIATION
(2023)
Article
Economics
Yaron Azrieli
Summary: A decision maker wants to delegate information acquisition to an expert but cannot observe their actions or delay payment. By hiring multiple experts and making payments contingent on the entire vector of signals, useful information can be obtained.
GAMES AND ECONOMIC BEHAVIOR
(2022)
Article
Economics
Ketki Sheth
Summary: The study found that micro health insurance offered through informal financial institutions did not increase healthcare utilization, but did exhibit evidence of adverse selection.
Article
Economics
Bruno Biais, Florian Heider, Marie Hoerova
Summary: In order to share risk, protection buyers trade derivatives with protection sellers, but the actions of protection sellers can create counterparty risk. To mitigate this, optimal derivative contracts involve variation margins. Despite the fire-sale externality, equilibrium is information-constrained efficient.
REVIEW OF ECONOMIC STUDIES
(2021)