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1تقرير
المؤلفون: Bosch-Rosa, Ciril, Gietl, Daniel, Heinemann, Frank
الوصف: This paper investigates whether limited liability and moral hazard affect risk-taking through motivated beliefs. On the one hand, limited liability pushes investors towards taking excessive risks. On the other, such excesses make it hard for investors to maintain a positive self-image when moral hazard is present. Using a novel experimental design, we show that subjects form motivated beliefs to self-justify their excessive risk-taking. For the same investment opportunity, subjects invest more and are significantly more optimistic about the success of the investment if their failure can harm others. We show that more than one third of the investment increase under limited liability can be explained through motivated beliefs. Moreover, using a treatment with limited liability but no moral hazard, we show that motivated beliefs are formed subconsciously and can lead to the paradoxical result of investors taking larger risks when their investment can harm a third party than when it cannot. These results underscore the importance of motivated beliefs in regulatory policy as they show that one should target not only bad incentives but also “bad beliefs.”
العلاقة: Series: CESifo Working Paper; No. 9477; gbv-ppn:1782357580; http://hdl.handle.net/10419/249022Test; RePec:ces:ceswps:_9477
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2تقرير
المؤلفون: Bosch-Rosa, Ciril, Gietl, Daniel, Heinemann, Frank
مصطلحات موضوعية: ddc:330, C91, D84, G11, G41, Limited Liability, Motivated Beliefs, Experiment
الوصف: This paper investigates whether limited liability affects risk-taking through motivated beliefs. To do so, we run a within-subject experiment in which subjects invest in a risky asset under full or limited liability. In both cases, before the investment is made, subjects observe a noisy signal that indicates whether the investment will succeed or fail. They then state the likelihood of the investment's success and decide how much to invest. Our results show a strong effect of limited liability on both the investment decision and the formation of motivated beliefs. Compared to subjects under full liability, subjects under limited liability not only invest larger amounts but are also significantly more optimistic about the success of their investments. Finally, we show that more than one-third of the increase in investment under limited liability can be explained through motivated beliefs.
العلاقة: Series: Discussion Paper; No. 210; gbv-ppn:1686680023; http://hdl.handle.net/10419/222107Test
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3تقرير
المؤلفون: Gietl, Daniel
مصطلحات موضوعية: ddc:330, H20, H30, G28, G41, Overconfidence, Bailouts, Banking Regulation, Bonus Taxes
الوصف: Empirical evidence suggests that managerial overconfidence and government guarantees contribute substantially to excessive risk-taking in the banking industry. This paper incorporates managerial overconfidence and limited bank liability into a principal-agent model, where the bank manager unobservably chooses effort and risk. An overconfident manager overestimates the returns to effort and risk. We find that managerial overconfidence necessitates an intervention into banker pay. This is due to the bank's exploitation of the manager's overvaluation of bonuses, which causes excessive risk-taking in equilibrium. Moreover, we show that the optimal bonus tax rises in overconfidence, if risk-shifting incentives are sufficiently large. Finally, the model indicates that overconfident managers are more likely to be found in banks with large government guarantees, low bonus taxes, and lax capital requirements.
العلاقة: Series: Discussion Paper; No. 132; gbv-ppn:1066686564; http://hdl.handle.net/10419/194028Test; RePEc:rco:dpaper:132
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4دورية أكاديمية
المؤلفون: Bosch-Rosa, Ciril, Gietl, Daniel, Heinemann, Frank
الوصف: This paper investigates whether limited liability and moral hazard affect risk-taking through motivated beliefs. On the one hand, limited liability pushes investors towards taking excessive risks. On the other, such excesses make it hard for investors to maintain a positive self-image when moral hazard is present. Using a novel experimental design, we show that subjects form motivated beliefs to self-justify their excessive risk-taking. For the same investment opportunity, subjects invest more and are significantly more optimistic about the success of the investment if their failure can harm others. We show that more than one third of the investment increase under limited liability can be explained through motivated beliefs. Moreover, using a treatment with limited liability but no moral hazard, we show that motivated beliefs are formed subconsciously and can lead to the paradoxical result of investors taking larger risks when their investment can harm a third party than when it cannot. These results underscore the importance of motivated beliefs in regulatory policy as they show that one should target not only bad incentives but also “bad beliefs.”
العلاقة: gbv-ppn:1782357580; RePec:ces:ceswps:_9477; http://hdl.handle.net/10419/249022Test
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5دورية أكاديمية
المؤلفون: Bosch-Rosa, Ciril, Gietl, Daniel, Heinemann, Frank
مصطلحات موضوعية: ddc:330, C91, D84, G11, G41, Limited Liability, Motivated Beliefs, Experiment, eco, droit
الوصف: This paper investigates whether limited liability affects risk-taking through motivated beliefs. To do so, we run a within-subject experiment in which subjects invest in a risky asset under full or limited liability. In both cases, before the investment is made, subjects observe a noisy signal that indicates whether the investment will succeed or fail. They then state the likelihood of the investment's success and decide how much to invest. Our results show a strong effect of limited liability on both the investment decision and the formation of motivated beliefs. Compared to subjects under full liability, subjects under limited liability not only invest larger amounts but are also significantly more optimistic about the success of their investments. Finally, we show that more than one-third of the increase in investment under limited liability can be explained through motivated beliefs.
العلاقة: gbv-ppn:1686680023; http://hdl.handle.net/10419/222107Test
