A Critical Examination of the Climate Engineering Moral Hazard and Risk Compensation Concern

2014 ◽  
Author(s):  
Jesse Reynolds
Keyword(s):  
Moral Hazard ◽  
Risk Compensation ◽  
Critical Examination ◽  
Climate Engineering ◽  
Hazard And Risk

Moral Hazard and Risk Spreading in Partnerships

1995 ◽  
Vol 26 (4) ◽  
pp. 591 ◽  
Author(s):  
Martin Gaynor ◽  
Paul Gertler
Keyword(s):  
Moral Hazard ◽  
Hazard And Risk ◽  
Risk Spreading

scholarly journals LIMITED LIABILITY, MORAL HAZARD, AND RISK TAKING: A SAFETY NET GAME EXPERIMENT

2012 ◽  
Vol 51 (2) ◽  
pp. 1389-1403 ◽  
Author(s):  
SASCHA FÜLLBRUNN ◽  
TIBOR NEUGEBAUER
Keyword(s):  
Moral Hazard ◽  
Risk Taking ◽  
Limited Liability ◽  
Safety Net ◽  
Hazard And Risk

Dynamic Moral Hazard and Risk-Shifting Incentives in a Leveraged Firm

2019 ◽  
Vol 55 (4) ◽  
pp. 1333-1367 ◽  
Author(s):  
Alejandro Rivera
Keyword(s):  
Moral Hazard ◽  
Empirical Studies ◽  
Risk Shifting ◽  
Optimal Contract ◽  
Positive Relation ◽  
Negative Relation ◽  
Moral Hazard Problem ◽  
Hazard And Risk ◽  
Incentive Constraint ◽  
Monotonic Relation

I develop an analytically tractable model that integrates the risk-shifting problem between bondholders and shareholders with the moral-hazard problem between shareholders and the manager. An optimal contract binds shareholders and the manager, and this contract’s flexibility allows shareholders to relax the manager’s incentive constraint following a “good” profitability shock. Thus, the optimal contract amplifies the upside and thereby increases shareholder appetite for risk shifting. Whereas some empirical studies find a positive relation between risk shifting and leverage, others find a negative relation. This model predicts a non-monotonic relation between risk shifting and leverage and can reconcile these contradictory empirical findings.

scholarly journals Ethical aspects of the mitigation obstruction argument against climate engineering research

2014 ◽  
Vol 372 (2031) ◽  
pp. 20140062 ◽  
Author(s):  
David R. Morrow
Keyword(s):  
Moral Hazard ◽  
Climate Policy ◽  
Ethical Question ◽  
Ethical Aspects ◽  
Climate Engineering ◽  
Precautionary Approach ◽  
Policy Makers ◽  
Engineering Research ◽  
Moral Hazard Problem ◽  
Ethical Perspectives

Many commentators fear that climate engineering research might lead policy-makers to reduce mitigation efforts. Most of the literature on this so-called ‘moral hazard’ problem focuses on the prediction that climate engineering research would reduce mitigation efforts. This paper focuses on a related ethical question: Why would it be a bad thing if climate engineering research obstructed mitigation? If climate engineering promises to be effective enough, it might justify some reduction in mitigation. Climate policy portfolios involving sufficiently large or poorly planned reductions in mitigation, however, could lead to an outcome that would be worse than the portfolio that would be chosen in the absence of further climate engineering research. This paper applies three ethical perspectives to describe the kinds of portfolios that would be worse than that ‘baseline portfolio’. The literature on climate engineering identifies various mechanisms that might cause policy-makers to choose these inferior portfolios, but it is difficult to know in advance whether the existence of these mechanisms means that climate engineering research really would lead to a worse outcome. In the light of that uncertainty, a precautionary approach suggests that researchers should take measures to reduce the risk of mitigation obstruction. Several such measures are suggested.

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