A recent study demonstrated that when states pass laws mandating that health insurance cover treatment for alcoholism, alcoholism rates in the state as well as alcohol related medical issues and drunk driving increase significantly. This is an example of: A. Adverse selection B. Risk spreading C. Moral hazard D. Opportunism
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- Please ASAP this multiple choice question. Thank you. In the 1980s , Boston developed Operation Ceasefire, which was meant to clearly describe the consequences of criminal activity to a tageted group of high risk repeat offenders. This type of program best represents which purpose of punishment? A. Incapacitation B. Retribution C. General deterrence D. Specific deterrenceIt was felt that liability insurance would undermine the tort system, which has as its central theorem the concept that the individual responsible for injuring another should be made to pay for that injury. Do you think the existence of liability insurance causes one to be less careful than he or she might otherwise be?Consider the following steps: 1. Celia chooses how much care, x ∈ [0, 1], to take in programming her robot. This effort costs her x^2/2. 2. Nature chooses whether the robot steps on Peter’s pet salamander, leading to emotional harm to Peter of H > 0 (with probability 1 − x). If the robot does step on the salamander then there is a chance of π that Celia will be identified as the culprit. - If there is no accident (the salamander is not stepped on), then Celia’s payoff is V − x^2/2. Peter and Luke both get zero. - If there is an accident, but Celia is not identified as the culprit, then Celia gets V − x^2/2. Peter gets −H. Luke gets zero. - If there is an accident, and Celia is identified as the culprit, then Luke (the judge) decides a level of compensation D ∈ R+ for Celia to pay Peter. Celia gets V − (x^2)/2−D. Peter gets D−H. Luke gets −(βH−D)^2. h) What would β have to equal, in order for Celia to choose the socially optimal level of x in a Subgame Perfect Equilibrium ? We are…
- What type of bias relies too heavily on one piece of information in making a final decision? A. Availability Heuristic Bias B. Bandwagon Effect C. Anchoring BiasSuppose an individual saves as precaution against adverse events, like unemployment. This is an example of a-adverse selection b-self-insurance c-adverse saving d-moral hazardWhich of the following is an example of moral hazard? Group of answer choices A. Reckless drivers are the ones most likely to buy automobile insurance. b. Retail stores located in high-crime areas tend to buy theft insurance more often than stores located in low-crime areas. C. Drivers who have many accidents prefer to buy cars with air bags. D. Employees recently covered by the company health plan start going to the doctor every time they get a cold. E. Company divisions try to improve profitability at each other's expense.
- 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. Speculate on why police departments do not increase their applicant pool by dropping this requirement and how asymmetric information, moral hazard, and adverse selection are involved?In the mid-1990s, the state of New Jersey revised its rules for the individual insurance market and began requiring that insurers charge the same premiums for the same coverage to all applicants. Assuming that insurers had previously used medical underwriting, which of the following is a predictable consequence of adverse selection? 1) Insurance becomes less attractive to the healthiest individuals, so fewer of them buy it 2) Insurers’ average costs of providing coverage increase because of a changing risk pool 3) The average age of those buying in the individual market goes up 4) All of the aboveConsider the following steps Celia chooses how much care, x ∈ [0,1], to take in programming her robot. This effort costs her x^2/2. Nature chooses whether the robot steps on Peter’s pet salamander, leading to emotional harm to Peter of H > 0 (with probability 1 - x). If the robot does step on the salamander then there is a chance of π that Celia will be identified as the culprit. If there is no accident (the salamander is not stepped on), then Celia’s payoff is V - x^2/2. Peter and Luke both get zero. If there is an accident, but Celia is identified as the culprit, then Celia gets V - x^2/2. Peter gets -H. Luke gets zero. If there is an accident, and Celia is identified as the culprit, then Like (the judge) decides a level of compensation D ∈ R+ for Celia to pay Peter. Celia gets V - x^2/2 - D. Peter gets D - H. Luke gets −(βH - D)^2. f) Now we turn to social otimality rather than equilibrium. Consider the value judgement that the optimal level of care is…
- Consider the following steps Celia chooses how much care, x ∈ [0,1], to take in programming her robot. This effort costs her x^2/2. Nature chooses whether the robot steps on Peter’s pet salamander, leading to emotional harm to Peter of H > 0 (with probability 1 - x). If the robot does step on the salamander then there is a chance of π that Celia will be identified as the culprit. If there is no accident (the salamander is not stepped on), then Celia’s payoff is V - x^2/2. Peter and Luke both get zero. If there is an accident, but Celia is identified as the culprit, then Celia gets V - x^2/2. Peter gets -H. Luke gets zero. If there is an accident, and Celia is identified as the culprit, then Like (the judge) decides a level of compensation D ∈ R+ for Celia to pay Peter. Celia gets V - x^2/2 - D. Peter gets D - H. Luke gets −(βH - D)^2. A) Draw a game tree to represent this model.Consider the following steps Celia chooses how much care, x ∈ [0,1], to take in programming her robot. This effort costs her x^2/2. Nature chooses whether the robot steps on Peter’s pet salamander, leading to emotional harm to Peter of H > 0 (with probability 1 - x). If the robot does step on the salamander then there is a chance of π that Celia will be identified as the culprit. If there is no accident (the salamander is not stepped on), then Celia’s payoff is V - x^2/2. Peter and Luke both get zero. If there is an accident, but Celia is identified as the culprit, then Celia gets V - x^2/2. Peter gets -H. Luke gets zero. If there is an accident, and Celia is identified as the culprit, then Like (the judge) decides a level of compensation D ∈ R+ for Celia to pay Peter. Celia gets V - x^2/2 - D. Peter gets D - H. Luke gets −(βH - D)^2. h) What would β have to equal, in order for Celia to choose the socially optimal level of x in a Subgame Perfect Equilibrium ?…Consider the following steps Celia chooses how much care, x ∈ [0,1], to take in programming her robot. This effort costs her x^2/2. Nature chooses whether the robot steps on Peter’s pet salamander, leading to emotional harm to Peter of H > 0 (with probability 1 - x). If the robot does step on the salamander then there is a chance of π that Celia will be identified as the culprit. If there is no accident (the salamander is not stepped on), then Celia’s payoff is V - x^2/2. Peter and Luke both get zero. If there is an accident, but Celia is identified as the culprit, then Celia gets V - x^2/2. Peter gets -H. Luke gets zero. If there is an accident, and Celia is identified as the culprit, then Like (the judge) decides a level of compensation D ∈ R+ for Celia to pay Peter. Celia gets V - x^2/2 - D. Peter gets D - H. Luke gets −(βH - D)^2. b) Write down Celia's expected payoff when she chooses x in step 1.