Question

In this years football world cup, Australia were drawn in a group with France, Denmark and Peru. In the last game of the group, Australia needed to win to win against Peru to go through to the next round. Peru on the other hand did not have any chance of progressing to the next round even if they were to win. If moral hazard is a serious problem in football, who do you think is more likely to win this match?

A) Australia

B) Peru

C) Both teams are equally likely to win.

D) The answer cannot be determined based on the information provided.

Answer 1

First we understand what does the key word" moral hazard or moral Mopia" in this question mean , accordingly its a situation that one team gets involved in a risky event knowing that it is protected against the risk & the other team will incurr the concequences. it also arises that both the teams have incomplete information about each other & the results. The behaviour is influenced by various" incentives"

ANS D) The answer cannot be derermined based on the information provided ---- I justfy my statement that since, it is a game of football & eleven players are involved for only one mission to hit goals, what ever may be the consequences.