@TechReport{iza:izadps:dp7806,
            	author={Bertola, Giuseppe and Koeniger, Winfried},
            	title={Hidden Insurance in a Moral Hazard Economy},
            	year={2013},
	month={Dec},
            	institution={Institute of Labor Economics (IZA)},
            	address={Bonn},
            	type={IZA Discussion Paper},
            	number={7806},
            	url={https://www.iza.org/publications/dp7806},
	abstract={We consider an economy where individuals privately choose effort and trade competitively priced securities that pay off with effort-determined probability. We show that if insurance against a negative shock is sufficiently incomplete, then standard functional form restrictions ensure that individual objective functions are optimized by an effort and insurance combination that is unique and satisfies first- and second-order conditions. Modeling insurance incompleteness in terms of costly production of private insurance services, we characterize the constrained inefficiency arising in general equilibrium from competitive pricing of nonexclusive financial contracts.},
	keywords={first-order approach;principal agent;hidden action;constrained efficiency},
            }