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Catarina Goulão and Luca Panaccione
''Pooling promises with moral hazard''
( 2015, Vol. 35 No.1 )
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.
Keywords: moral hazard, pool of promises
JEL: D3 - Distribution: General
D8 - Information, Knowledge, and Uncertainty: General
Manuscript Received : Feb 05 2014 Manuscript Accepted : Mar 11 2015

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