Arnold Chassagnon

• Professor (Full), Chercheur associé PSE, directeur adjoint PSE at Paris School of Economics, French National Centre for Scientific Research

We study capital markets in which investors compete by designing financial contracts to control an entrepreneur’s ability to side trade and default on multiple loans. We show that covenants may have anticompetitive effects: in particular, they prevent investors from providing additional funds and reduce the entrepreneur’s investment capacity. As a...

We study capital markets in which investors compete by designing financial contracts to control an entrepreneur’s ability to side trade and default on multiple loans. We show that covenants may have anticompetitive effects: in particular, they prevent investors from providing additional funds and reduce the entrepreneur’s investment capacity. As a...

Is it Rational Not to Purchase Long Term Care Insurance? Private insurance for long-term care is underdeveloped in European countries and in the US. This paper tries to understand why the market is underdevelopped by using a theoretical approach and putting the emphasis on insurance demand. It shows that demand for long term care insurance can be l...

The work introduces a simple framework to study the relationship between competition and incentives under non-exclusivity. We characterize the equilibria of an insurance market where intermediaries com- pete over the contracts they offer to a single consumer in the presence of moral hazard. Non-exclusivity is responsible for under-insurance and pos...

We consider a formal approach to comparative risk aversion and apply it to intertemporal choice models. This allows us to ask whether standard classes of utility functions, such as those inspired by Kihlstrom and Mirman (1974) [16], Selden (1978) [27], Epstein and Zin (1989) [10] and Quiggin (1982) [25] are well ordered in terms of risk aversion. M...

We consider a formal approach to comparative risk aversion and applies it to intertemporal choice models. This allows us to ask whether standard classes of utility functions, such as those inspired by Kihlstrom and Mirman [15], Selden [26], Epstein and Zin [9] and Quiggin [24] are well-ordered in terms of risk aversion. Moreover, opting for this mo...

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We study an economy where intermediaries compete over contracts in a nonexclusive insurance market affected by moral hazard. In this context, we show that, contrarily to what is commonly believed, market equilibria may fail to be efficient even if the planner is not allowed to enforce exclusivity of trades (third best inefficiency). Our setting is...

That paper formalizes the idea that when the magnitude of the moral hazard phenomenon is not important, the distortions like equilibria multiplicity or equilibrium discontinuity relative to the economic fundamentals disappear. We study a two state of nature insurance model, with a risk neutral principal, a risk averse agent and separable costs. Typ...

The paper formally proves that all the distortions usually associated to moral hazard (i.e. equilibrium multiplicity and discontinuous dependence of equilibrium behaviors on fundamentals) disappear when the incentive problems are sufficiently mild. We study a standard insurance model where preferences are separable in consumption and effort. We int...

We study an economy where intermediaries compete over contracts in a nonexclusive insurance market affected by moral hazard. Our setting is the same as that developed in Bisin and Guaitoli [2004]. The present note provides a counterexample to the set of necessary conditions for high effort equilibria developed in Bisin and Guaitoli [2004] and sugge...

The present paper thoroughly explores second-best efficient allocations in an insurance economy with adverse selection. We start with a natural extension of the classical model, assuming less than perfect risk perception. We characterize the constraints on efficient redistribution, and we summarize the incidence of incentives on the economy with th...

In the multi-prior framework, we consider that there exist two sorts of information process: revision information and focusing information. The second one is standard in economics while the former cannot be defined when there is only one prior. In this paper, we provide a coherent definition of "revising'' information structure. We show that we get...

We consider a model of pure competition between insurers a la Rothschild- Stiglitz, where two types of agents privately choose an eort level, and where the eort costs and the resulting accident probabilities dier across agents. We characterize the set of possible separating equilibria, with a special emphasis on the case where the Spence-Mirrlees c...

The Total Quality Control stream has shed the light on the impact of the quality of the work on the eciency of the firm. The choice of quality has thus become a striking issue for the firms. We model a situation in which employees have to choose a certain level of quality of their work. Moreover agents are assumed to be heterogeneous with respect t...

This paper constructs a simple Common Agency model to represent competition in non-exclusive insurance markets where the agents' effort choices cannot be contracted upon. Referring to such an oligopolistic scenario, we are able to provide the same equilibrium characterization as the one derived in most of the recent literature of competitive market...

The work introduces a simple framework to study the relationship between competition and incentives under non-exclusivity. We characterize the equilibria of an insurance market where intermediaries com- pete over the contracts they offer to a single consumer in the presence of moral hazard. Non-exclusivity is responsible for under-insurance and pos...

The present paper thoroughly explores second-best efficient allocations in an adverse selection insurance economy. We start from a natural extension of the classical model, assumer less than perfect risk perceptions. We propose first and second welfare theorems, by means of which we describe efficiency-enhancing policies. Notions of weak and strong...