Severity Risk and the Adverse Selection of Frequency Risk

In the construction market, the adverse selection is very prone to occur as a result of the current situation that the two parties’ information is asymmetric, which causes the construction market disorder and uncontrolled market behaviors. For example, in the bidding phase of the project, the owner doesn’t know clearly of the contractor's technical strength, level of management, service quality, and so on; also the contractor is unclear of the owner’s intention of building, financial capacity, and business reputation etc. at the same time, which leads to adverse selection of bidding market because of inaccurate judgment of the actual risk situation and strength of the contractor. In order to preventing this construction project risk ,this paper is to apply asymmetric information theory to project risk management and finally proves that the contractor 's strength can become the deferent signal of the risk type of the contractor through the analysis of the signaling model based on the contractor’s strength. Meanwhile, the owner can judge the risk type of the contractor by acquired the strength and pretended cost of bidding. It is helpful to solve the problem of adverse selection by founding an effective mechanism of signaling, thereby preventing construction project risk.

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Causal relationships of moral hazard and adverse selection of Ghanaian Public-Private-Partnership (PPP) construction projects

Journal of Engineering Design and Technology ◽

10.1108/jedt-12-2017-0137 ◽

2018 ◽

Vol 16 (3) ◽

pp. 439-460 ◽

Cited By ~ 2

Author(s):

De-Graft Owusu-Manu ◽

A.S. Kukah ◽

David John Edwards ◽

Erika Anneli Pärn ◽

Hatem El-Gohary ◽

...

Keyword(s):

Moral Hazard ◽

Adverse Selection ◽

Construction Projects ◽

Public Private Partnership ◽

Likelihood Method ◽

Parameter Estimates ◽

Causal Relationships ◽

Private Partnership ◽

Content Type ◽

Selection Of

PurposeThe purpose of this paper was to assess the causal relationship(s) between moral hazard and adverse selection of public–private partnership (PPP) construction projects. Structural equation modelling (SEM) was used to explore the cause and effect relationship between moral hazard and adverse selection problems in PPP construction projects in Ghana. The study produced a framework to predict, estimate and depict the complex causal relationships (i.e. the directionality) between moral hazard and adverse selection.Design/methodology/approachTo test the proposed framework, a quantitative methodology was used, in which, data were collected using research questionnaires that targeted a sample of 280 PPP stakeholders in Ghana. In total, 210 useable questionnaires were retrieved, representing a response rate of 75 per cent.FindingsThe interrelationships between the eight causes and the nine effects of moral hazard and adverse selection were established using the model. The tested framework showed the degree of association and isolation of the unobserved variables on the indicator factors. Confirmatory factor analysis (CFA) was used to evaluate the fit of items to latent constructs. Because the fit of each model was good and the item loadings were adequate, it was assumed that the indicators of the different variables factors were fitting. Furthermore, a diagnostic fit analysis was conducted using the robust maximum likelihood method to test the statistical significance of the parameter estimates.Practical implicationsThis novel research is one of the few studies investigating the causal relationships between moral hazard and adverse selection of PPP construction projects. The research concluded with future studies that seek to validate the model developed in other countries and/or other industries.Originality/valueThe research findings will serve as a guide for construction stakeholders in the PPP sector on the causes and effects of adverse selection and moral hazard and how to mitigate these.

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Research on the Adverse Selection of Chinese Enterprises IPO

2010 International Conference on Management and Service Science ◽

10.1109/icmss.2010.5576952 ◽

2010 ◽

Author(s):

Zhenyu Wang ◽

Chao Wang

Keyword(s):

Adverse Selection ◽

Chinese Enterprises ◽

Selection Of

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Analysis of Carbon Neutrality Programmes in the International Market

10.26686/wgtn.16968244 ◽

2021 ◽

Author(s):

◽

Robert Mitchell

Keyword(s):

Literature Review ◽

Information Asymmetry ◽

Adverse Selection ◽

Service Providers ◽

Market Failures ◽

Environmental Reporting ◽

Carbon Neutrality ◽

Potential Market ◽

Carbon Neutral ◽

Selection Of

<p>Carbon Neutrality is a new concept that lacks a broadly accepted definition. There are diverse definitions and many different carbon neutrality programmes available in the market. The availability of so many diverse definitions and programmes can create confusion about what consumers are buying and whether or not it is of a reasonable level of quality. This thesis's aim was to analyse a selection of programmes from the Carbon Neutrality market to gain a greater understanding of content, process, and criteria that comprise carbon programmes. As there was a lack of literature available on Carbon Neutrality; this thesis developed a series of criteria that were developed from a literature review of the broader literature of environmental. The literature review focused on potential market failures, environmental reporting and eco-labels, which identified issues such as information asymmetry, lack of transparency, and adverse selection. Of the Carbon Neutrality service providers asked to participate in this thesis, the majority declined, as a result two were analysed; The Carbon Neutral Company, and CarbonZero. The analysis showed that the programmes use many, but not all, of the criteria identified by this thesis as necessary to provide accurate and comprehensive Carbon Neutral accreditation. The programmes varied in their definitions of what is Carbon Neutrality. This was illustrated by which sections of their programmes were voluntary and which were mandatory. This thesis came to the conclusion that as an undeveloped market there are issues around what should be included in a programme. The criteria developed by this thesis also have the potential to be used for analysing environmental reporting standards and eco-labels. Furthermore methods of communicating a programme's content and the outcome of CN accreditation varied, exhibiting both positive and negative aspects addressing issues such as information asymmetry and adverse selection.</p>

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Difficulties Encountering Multileveled Classes Teachers' in Teaching Reading Comprehension (A case study of Cambridge Training Centers and British Educational Institutes in Khartoum State, Sudan)

10.31235/osf.io/p8qzc ◽

2020 ◽

Author(s):

Osama Yousif Ibrahim Abualzain

Keyword(s):

Reading Comprehension ◽

Adverse Selection ◽

Quantitative Method ◽

Classroom Observation ◽

Background Knowledge ◽

Teaching Reading ◽

Reading Materials ◽

Teachers Training ◽

Selection Of

The study aims at investigating the difficulties encountered by English centers teachers of multileveled classes in teaching reading comprehension, and suggests some suitable strategies that can alleviate the problems. To run the study, thirty-four language center teachers' from Khartoum State are the sample of the study. A questionnaire, supported by classroom observation, was the collecting data tool. The quantitative method matches this type of research. The findings of the study reveal that the difficulties encountered by multileveled classes teachers' attributed to the students' limited vocabulary, poor background knowledge, annoying reading materials, lack of teachers' training, and adverse selection of suitable strategies. The findings of this study are of high value for syllables designers as well as multileveled classes’teachers. Teachers have to adopt adequate strategies, choosing attractive reading materials, and they should be equipped with the required training.

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The Role of Neuroaccounting (the Science of Neural-based Accounting) in Decision Making

BRAIN. BROAD RESEARCH IN ARTIFICIAL INTELLIGENCE AND NEUROSCIENCE ◽

10.18662/brain/12.1/169 ◽

2021 ◽

Vol 12 (1) ◽

pp. 40-50

Author(s):

Tri Frida Suryati ◽

William Indra S. Mooduto

Keyword(s):

Decision Making ◽

Adverse Selection ◽

Policy Making ◽

Collection Method ◽

The Public ◽

Agency Relationships ◽

Policy Making Process ◽

The Brain ◽

Selection Of

The present study aims to determine the role of neuroaccounting in decision making. The data collection method is conducted by using interviews, moreover, the data analysis is analyzed by administering the interpretation of subjective understanding of informants which then followed by researchers' reflexivity. The results suggest that principal-agent relationships can occur when the legislature and the executive establish agency relationships in the policy-making process. In the perception of neuroscience; the interest of interest, the limited time of office, the inclination and limitation of knowledge to know all the public needs can be imprinted and settled in the brain, thus, it can create moral hazard and adverse selection of behavior.

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Moral Hazard Effects of Corporate Bond Guarantee Purchases: Empirical Evidence from China

Journal of Economics and Behavioral Studies ◽

10.22610/jebs.v10i5(j).2501 ◽

2018 ◽

Vol 10 (5(J)) ◽

pp. 100-115

Author(s):

Xueying Zhang ◽

Shansheng Gao ◽

Jian Jiao

Keyword(s):

Moral Hazard ◽

Empirical Evidence ◽

Adverse Selection ◽

Credit Rating ◽

Bond Market ◽

Corporate Bond ◽

Evidence Based ◽

Corporate Bond Market ◽

Selection Of ◽

Better Than

This study examines corporate bond guarantees by developing a theoretical model that decomposes the overall impact of a guarantee into signalling and incentive effects and presenting empirical evidence based on data from Chinaâ€™s corporate bond market. Our empirical research yields considerable evidence for the effects we posit in the model and provides some important insights into the problems of adverse selection and moral hazard in Chinaâ€™s bond market. The empirical evidence shows that the bond issuer with lower credit rating are more willing to purchase a bond guarantee and guaranteed bonds have a higher issue spread yield than those non-guaranteed bonds, even though both have the same bond credit rating. Our findings suggest that moral hazard would be better than adverse selection to explain the self- selection of bond guarantees. Prior to bond issuance credit rating signal provides a mechanism to mitigate information inequality, while bond guarantees relieve information asymmetry afterwards.

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