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Abstract
We reviewed some moral hazard (MH) models applied to agri-environmental policies and
identified the main methodological aspects of the literature on this topics. Imperfect vs
incomplete monitoring , static vs dynamic and single vs multiple agents models are the main
lines along which the literature has been organised analysing each component of a MH model.
Most papers point out the role of farmers' risk aversion in mitigating MH. Others highlight that
the observed high rate of compliance is still somewhat paradoxical given current enforcement
strategies with low fines and monitoring levels. Cross compliance confirm these findings and
urges further studies on dynamic models and farmers' non profit maximising behaviour.