Corporate insurance and managerial incentives

Article Abstract:

An agency model was formulated to study the use of corporate insurance by publicly owned firms. The model assumes that insurance firms act as investigators to confirm whether or not accidents were insured. A pair of managerial performance measures can be created from the confirmation outcome when the manager does multiple acts to cut the expected number of accidents. Optimal pair performance can be derived when the corporate insurance policy insures all uncontrollable accidents and some controllable accidents that are 'costlier' for the manager to avoid.

Insurance Management, Research, Insurance, Business insurance, Differential equations, Stochastic systems

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Network mechanisms, informational efficiency, and hierarchies

Article Abstract:

Organizational members may try using various network mechanisms in order to reduce communication costs and provide other agents with a wide range of alternative action choices to attain the desired outcomes. Through the use of network and price mechanisms, agents may not only create an aggregate collection of marginal valuations but also ensure that responsibilities are evenly distributed to other agents. Communication between agents may further be made hierarchical by introducing additional variables into messages.

Information Systems, Economic aspects, Communication, Communications, Information theory, Information management

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Search for a monetary propagation mechanism

Article Abstract:

A monetary propagation mechanism is considered showing that a low money growth rate increases steady state employment and output while a high money growth rate promotes the opposite. The mechanism considers an economy where exchanges in goods and labor markets involve costly search. It is found to produce persistent hump-shaped responses in the output of employment and not-so persistent outputs to money growth shocks.

Analysis, Economics, Markets (Economics)

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