Give an example, real or imaginary, of a moral hazard problem. Again, your example must clearly point out: what information is private/asymmetric (is it an attribute or an action?) which party has the private information when does the information asymmetry arise (before or after the contract/transaction?) what is the likely outcome and in which way it can be inefficient
Give an example, real or imaginary, of a moral hazard problem. Again, your example must clearly point out: what information is private/asymmetric (is it an attribute or an action?) which party has the private information when does the information asymmetry arise (before or after the contract/transaction?) what is the likely outcome and in which way it can be inefficient
Chapter17: Income, Poverty, And Health Care
Section: Chapter Questions
Problem 25P
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Give an example, real or imaginary, of a moral hazard problem.
Again, your example must clearly point out:
- what information is private/asymmetric (is it an attribute or an action?)
- which party has the private information
- when does the information asymmetry arise (before or after the contract/transaction?)
- what is the likely outcome and in which way it can be inefficient
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