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The moral hazard of mandatory membership in …
Research in Business and Economics Journal The moral hazard , page 1 The moral hazard of mandatory membership in private clubs Leon Hoke The University of Tampa Brian T. Kench The University of Tampa Charles Skipton The University of Tampa ABSTRACT There is a trend sweeping the private club industry in Florida, mandating that all homeowner association members pay initiation fees and dues to the private country club in their housing development. So-called mandatory membership fees are an attempt to eliminate, or at least reduce, a free-rider problem concerning the financial health of ailing private country clubs. This paper argues that the implementation of mandatory memberships creates a moral hazard problem. Because of mandatory memberships, homeowners now have little to no protection from the board of directors and staff of the country club that might be interested in empire building or promoting salary and benefits increases while forcing homeowners in the housing development to pay the tab.
Research in Business and Economics Journal The moral hazard, page 2 INTRODUCTION There is a trend sweeping the private country club industry, mandating that all common
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