Publication

Collaborative Housing and the Intermediation of Moral Hazard

Thomas Alois Weber
2014
Conference Papers

Abstract

This paper considers intermediation in a differentiated short-term housing market where heterogeneous agents may stay at a hotel or at one of several private hosts' properties, below or above hotel quality. The collaborative-housing market fails when agents' hidden actions are noncontractable. If expected liability is not excessive, a trusted intermediary can induce agents to exert first-best effort and fully insure the hosts' risks, without subsidizing the transactions. The intermediary can also extract the hosts' surplus if their outside option is zero; somewhat counterintuitively, the commission on either side of the transactions does not affect agents' equilibrium payoffs. The optimal commission structure makes direct transactions between hosts and renters unattractive.

Official source

https://infoscience.epfl.ch/entities/publication/f71771af-7a19-483e-a5c8-331443950c96

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Thomas Alois Weber
2014
Conference Papers

Abstract

Official source

https://infoscience.epfl.ch/entities/publication/f71771af-7a19-483e-a5c8-331443950c96

About this result

Related concepts (16)

Intelligent agent

In artificial intelligence, an intelligent agent (IA) is an agent acting in an intelligent manner; It perceives its environment, takes actions autonomously in order to achieve goals, and may improve its performance with learning or acquiring knowledge. An intelligent agent may be simple or complex: A thermostat or other control system is considered an example of an intelligent agent, as is a human being, as is any system that meets the definition, such as a firm, a state, or a biome.

Moral hazard

In economics, a moral hazard is a situation where an economic actor has an incentive to increase its exposure to risk because it does not bear the full costs of that risk. For example, when a corporation is insured, it may take on higher risk knowing that its insurance will pay the associated costs. A moral hazard may occur where the actions of the risk-taking party change to the detriment of the cost-bearing party after a financial transaction has taken place.

Agent (economics)

In economics, an agent is an actor (more specifically, a decision maker) in a model of some aspect of the economy. Typically, every agent makes decisions by solving a well- or ill-defined optimization or choice problem. For example, buyers (consumers) and sellers (producers) are two common types of agents in partial equilibrium models of a single market. Macroeconomic models, especially dynamic stochastic general equilibrium models that are explicitly based on microfoundations, often distinguish households, firms, and governments or central banks as the main types of agents in the economy.

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