Moral Hazard Problem in Collaboration Arrangements - Theory and Practice in Hungarian Agriculture

Abstract

By using one of the theoretical models of new institutional economics, the article analyzes the impact of moral hazard in machinery sharing arrangements. According to the experiences of research made on primary database, there are several forms of machinery sharing among the Hungarian field crop farms, although the activity within the partnerships is typically low. Our results have also proved that parallel with the cooperation mechanisms the moral hazard is also present in the interactions between farmers, although its level cannot be considered significant, either. As regards the utilization of agricultural machinery, there are several forms of cooperation among farmers, but the cooperation activity within these arrangements is low. Although statistical analyses have proved the negative impact of moral hazard on cooperation willingness among cooperating farms, we could conclude that in general the low cooperation activity cannot be explained by moral hazards.