Please use this identifier to cite or link to this item: https://hdl.handle.net/10419/81231 
Year of Publication: 
2006
Series/Report no.: 
IFN Working Paper No. 659
Publisher: 
Research Institute of Industrial Economics (IFN), Stockholm
Abstract: 
A large literature on ex ante moral hazard in income insurance emphasizes that the individual can affect the probability of an income loss by choice of lifestyle and hence, the degree of risk-taking. The much smaller literature on moral hazard ex post mainly analyzes how a “moral hazard constraint” can make the individual abstain from fraud (“mimicking”). The present paper instead presents a model of moral hazard ex post without a moral hazard constraint; the individual's ability and willing­ness to work is represented by a continuous stochastic variable in the utility function, and the extent of moral hazard depends on the generosity of the insurance system. Our model is also well suited for analyzing social norms concerning work and benefit dependency.
Subjects: 
Moral Hazard
Sick Pay Insurance
Labor Supply
Asymmetric Information
JEL: 
G22
H53
I38
J21
Document Type: 
Working Paper

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