Please use this identifier to cite or link to this item: http://hdl.handle.net/10419/82925
Authors: 
Dufwenberg, Martin
Lundholm, Michael
Year of Publication: 
1997
Series/Report no.: 
Working Paper, Department of Economics, Uppsala University 1997:28
Abstract: 
The probability of income loss depends on talent and effort. Effort has positive externalities and therefore individuals are proportion to their perceived diligence. The social norm requires more effort from individuals perceived as more talented, but talent is private information and individuals cunningly choose effort so as to manipulate the public perception of their talent. We analyze the workings of a social insurance system in this setting. It turns out that social norms may mitigate moral hazard. However, the distribution of social status in society will not be uniform.
Subjects: 
Social insurance
social norms
status
moral hazard
JEL: 
A14
C72
D81
D82
G28
H55
I38
J65
Document Type: 
Working Paper

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