Incentives, Risk Sharing and Wealth: A Model of Intrinsic Cycles
- When?
- Wednesday 20 March 2013, 13.00 to 14.30
- Where?
- 62 AP 02
- Open to:
- Public, Staff, Students, Alumni
- Speaker:
- Professor Sanjay Banerji, University of Nottingham
The Accounting and Finance group is pleased to present Professor Sanjay Banerji
Abstract
The paper shows that the interactions between incentives, risk sharing, and wealth may drive economic cycles in the steady state, where the economy oscillates between two equilibrium modes. When the economy is poor, it is in the incentivized mode, where the young agents take risks, work hard, and are more productive. Consequently, the economy gets richer, making it harder to incentivize the young generation. Eventually the economy falls into the disincentivized mode, where young agents obtain full insurance, shirk, and are less productive. As a result, the economy becomes poorer and eventually falls back into the incentivized mode. Such oscillations arise only when the productivity of the economy falls in a medium range.
A full copy of the paper can be viewed here:
Intrinsic Cycles (515.77KB - Requires Adobe Reader)
