Contracts, risk taking and diversification in the American whaling industry.

摘要

This thesis analyzes the connection between the contracts and organizational forms, and the risks undertaken, in the American whaling industry. Moral hazard problems forced the managers of whaling ships to maintain major stakes in their own vessels, even though there was an active market in shares in whaleships. This inability to diversify risk for the individual whaling managers in turn meant that the market in those shares provided too little incentive for diversification. As a result, too many ships would sail to the same place rather than diversifying across locations.; After a brief introduction, Chapter Two presents a history of the contracts employed in the American whaling industry, from the earliest colonial settlements until the late-nineteenth century, and illustrates how the contracts employed in whaling evolved over time. Chapter Three describes the consequences of the industry's responses to moral hazard for the risk-taking behavior of its entrepreneurs. In particular, the managers of whaling voyages had little incentive to seek out new locations on the world's oceans to pursue whales, and little incentive to diversify across the known locations for whaling. Chapter Four develops a very simple mean-variance model in which the manager of a whaling vessel selects a risky project (a whaling ground) for a voyage. Moral hazard problems lead him to retain a substantial portion of his vessel's equity, as outside investors will infer from his ownership stake the diligence with which he will perform his duties. The model illustrates how his choice of whaling is distorted by his undiversified ownership stake in his vessel. Chapter Five presents an empirical analysis of a panel of 723 whaling voyages from 1849–1860, which supports some predictions of the model.