Pooling and redistribution with moral hazard

Catarina Goulão, and Luca Panaccione


In this paper, we extend the framework of Dubey and Geanakoplos (2002) to the case 6 of moral hazard. Risk-averse consumers, who can in uence the likelihood of states of 7 nature by undertaking a hidden action, receive insurance by voluntarily participating 8 in a pool of promises of deliveries of future uncertain endowments. In exchange, they 9 gain the right to receive a share of the total return of the pool, in proportion to their 10 promises. We first analyze the equilibrium properties of the model and then illustrate 11 how an aggregate pool of promises of heterogenous consumers, differing in expected 12 endowment, results in a welfare improvement over the two segregated pools.


moral hazard; pool of promises; heterogeneous consumers;

JEL codes

  • D3: Distribution
  • D8: Information, Knowledge, and Uncertainty
  • G2: Financial Institutions and Services


Catarina Goulão, and Luca Panaccione, Pooling Promises with Moral Hazard, TSE Working Paper, n. 13-427, August 29, 2013.


Catarina Goulão, and Luca Panaccione, Pooling and redistribution with moral hazard, Economics Bulletin, vol. 35, n. 1, 2015.

Published in

Economics Bulletin, vol. 35, n. 1, 2015