Principal-agent Incentives, Excess Caution, and Market Inefficiency: Evidence From Utility Regulation

Severin Borenstein, Meghan Busse, Ryan Kellogg

NBER Working Paper No. 13679
Issued in December 2007

---- Acknowledgements -----

We are grateful for helpful contributions from Lucas Davis, Paul Gertler, Erin Mansur, Steve Tadelis, Matt White, and Frank Wolak and from seminar participants at U.C. Berkeley, U.C. Energy Institute, University of Michigan and NBER. We are grateful to the OpenLink Fund within U.C. Berkeley’s Coleman Fung Risk Management Research Center for financial support. The views expressed herein are those of the author(s) and do not necessarily reflect the views of the National Bureau of Economic Research.

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