Speaker: 黄鑫，南方科技大学

Inviter: 娄有成

Title: Moral Hazard in Investment’s Screening

Language: Chinese

Time & Venue: 2024.12.10 14:00-15:00 腾讯会议: 554 997 053

Abstract: Moral hazard, a pervasive phenomenon in economics, arises when an agent acting on behalf of a principal has incentives to prioritize his own interests due to hidden actions. In this talk, we begin with a brief review on three main types of principal-agent problems from a modeling perspective: the full-information problem, the moral hazard problem, and the adverse selection problem. We then focus on our moral hazard model, which incorporates unobservable screening effort that determines the drift of an underlying cash flow process. This model, simple yet challenging to solve, typically applies to scenarios where outside investors (the principal) aim to incentivize private-fund manager (the agent) to exert screening effort when selecting start-ups for investment. We finally explore several contracts designed to achieve first-best and second-best optimality in this information-asymmetric content.