Question

Topic: Moral hazard/adverse selection confusion A researcher may have difficulty separating moral hazard from adverse selection....

Topic: Moral hazard/adverse selection confusion

A researcher may have difficulty separating moral hazard from adverse selection. Use an example to show why this may be the case.

Business   Economics   
0 0
Add a commentTranscribed image text
Next >

Homework Answers

Answer #1

For example when person buys health insurance he may then choose to consume unhealthy lifestyle making insurance attractive for him while unprofitable for insurer enabling higher risk for insurer and thus moral hazard occurs.

However at same time problem of adverse selection occurs as person has morr information about his quality of health than insurer.

This creates confusion for researcher in identifying the efficacy of health insurance plan.

PLEASE UPVOTE INCASE YOU LIKED THE ANSWER WILL BE ENCOURAGING FOR US THANKYOU VERY MUCH ALL THE BEST IN FUTURE

0 0
Know the answer?
Your Answer:

Post as a guest

Your Name:

What's your source?

Earn Coins

Coins can be redeemed for fabulous gifts.

Log In

Sign Up

Not the answer you're looking for?
Ask your own homework help question
Similar Questions
There is frequent confusion about the terms asymmetric information, moral hazard, and adverse selection. Asymmetric information...
There is frequent confusion about the terms asymmetric information, moral hazard, and adverse selection. Asymmetric information is the cause, while moral hazard and adverse selection are the outcome. For this discussion, your focus will be to think through what these have to do with hiring a police officer. Instructions Consider the following statement: Many police officer positions require the applicant to have a college degree even though the tasks of a police officer rarely call upon college course material. In...
why the government may be able to reduce the losses due to adverse selection and moral...
why the government may be able to reduce the losses due to adverse selection and moral hazard? please explain in detail in word. not in handwriting
Many colleges offer pass/fail classes. Use the economic concepts of adverse selection and moral hazard to...
Many colleges offer pass/fail classes. Use the economic concepts of adverse selection and moral hazard to explain what may be the potential drawbacks or shortcomings of utilizing such a grading system
Does universal health care solve either the moral hazard or the adverse selection problem or both?
Does universal health care solve either the moral hazard or the adverse selection problem or both?
Topic: Adverse Selection Give an example of a situation that led (or could have) to adverse...
Topic: Adverse Selection Give an example of a situation that led (or could have) to adverse selection at your place of work. (Transportation)
Define ‘financial market’. How (a) moral hazard and (b) adverse selection can affect financial market stability?...
Define ‘financial market’. How (a) moral hazard and (b) adverse selection can affect financial market stability? – Explain
Topic: Adverse Selection Give an example of a situation that led (or could have) to adverse...
Topic: Adverse Selection Give an example of a situation that led (or could have) to adverse selection at your place of work. (Education/Community College)
Firms that hire outside consultants can reduce the impact of moral hazard by: A. hiring work...
Firms that hire outside consultants can reduce the impact of moral hazard by: A. hiring work on a fixed-fee basis B. monitoring the quality of the completed work C. hiring consultants with an established reputation for not shirking D. All of the above A business owner attains a bank loan to purchase a new delivery truck for the business, but they use the funds to take a vacation to Australia. Which of the following terms describes the problem with this...
Suppose you are trying to obtain car insurance from Geico. Upon checking your driving record, Geico...
Suppose you are trying to obtain car insurance from Geico. Upon checking your driving record, Geico denies your application because Geico finds out that you have had too many speeding tickets. In this example, Geico is using ________ to reduce _________. Select one: A. restrictive covenant- moral hazard B. restrictive covenant - adverse selection C. screening- moral hazard D. screening - adverse selection
Why is moral hazard a problem in the banking sector? a. Lack of competition in the...
Why is moral hazard a problem in the banking sector? a. Lack of competition in the banking industry mean that consumers have few alternatives, and so bank executives are able to make decisions without considering the preferences of their customers. b. Regulations are difficult to impose on international banks because they operate in multiple jurisdictions and use foreign currencies. c. Government bailouts of banks create a moral dilemma because they involve a transfer of money from regular taxpayers to rich...
ADVERTISEMENT
Need Online Homework Help?

Get Answers For Free
Most questions answered within 1 hours.

Ask a Question
ADVERTISEMENT