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1

Designing optimal pension rules: new results

100%
Simonovits A., Toth J.
Kozgazdasagi Szemle (Economic Review)
|
2007
|
vol. 54
|
issue 7/8
628-643
EN
This paper follows earlier ones by the same authors in applying mechanism design to finding an optimal non-linear pension-benefit rule for flexible retirement. It is assumed that individuals have private information about their expected life spans. The government's goal is to design a pension system (a payroll tax and a function that relates benefits to length of employment) that maximizes a social-welfare function and satisfies a social budget constraint (without satisfying the individual ones) redistribution. Since individuals with different life expectancies optimize their employment lengths conditionally on the benefit function, the government must also take into account incentive constraints. The authors' former studies reduced the inflexibility of the optimum and the excess in redistribution by rendering the social-welfare function concave. The new findings in this paper are: (1) some redistribution is inevitable in any reasonable pension system, and (2) second-best solutions may be local indeterminate, while (3) returning to utilitarianism, the minimization of redistribution is considered.
2

NEGATIVE SELECTION AND MORAL RISK IN POLITICS. AN OUTLINE OF THE USEFULNESS TO POLITICAL SCIENCE OF THE ECONOMIC CONCEPT OF INFORMATION ASYMMETRY (Hungarian title - below)

88%
Szanto Z.
Kozgazdasagi Szemle (Economic Review)
|
2009
|
vol. 56
|
issue 6
563-571
EN
(Title in Hungarian - 'Kontraszelekcio es erkolcsi kockazat a politikaban. Vazlat az informacios aszimmetria kozgazdasagtani fogalmainak politikatudomanyi alkalmazhatosagarol'). The paper argues in favour of employing in political science the economic concept of information asymmetry, seeking to show that the mechanisms of information asymmetry among the players on the political market may have negative effects on the operation of a democratic political system as information asymmetry among economic actors - according to arguments of Nobel prize-winning economists - has on the efficiency of market competition. The paper sheds new light on the phenomenon of negative political selection (known since Plato's time), and goes on to deal in detail with the appearance of moral risk and client/agent relations in politics. The author touches also on the appearance in politics of mechanisms - signals and filters - that economists suggest for reducing information asymmetry.
3

Sharing of information among banks. When is full-list a good thing?

75%
Major I.
Kozgazdasagi Szemle (Economic Review)
|
2008
|
vol. 55
|
issue 9
763-781
EN
The author sets out to prove that so-called full-list sharing of client information is the optimum course for banks acting rationally on an infinite time-scale, i.e. the one to yield the highest profit, in cases where the proportion of bad risks in the banking population is high, the good risks are decreasingly likely to repay their loans, and banks operate at significantly different marginal costs. Further preconditions for the advantages of full list are that each bank share its full client information and the information be reliable. However, where the proportion of bad risks is low or there is little difference in the banks' marginal costs, the dominant strategy will be for banks to refrain from sharing their client information. But both full information sharing and absence of information sharing are less favourable for good risks who service their loans on time than the so-called negative list, because in the former cases they pay a higher rate of interest than they would with negative sharing of information.
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