which of the strategies is effective in reducing moral hazard?  gatekeeping cost sharing prospective payment all of the above

Q: Explain the term adverse selection and moral hazard and show how these lead to market failure

A: Asymmetric information occurs when there is unequal information between two parties. In this…

Q: Which of the following represents an effort to correct for an adverse selection problem? a. The…

A: When talking about adverse selection, it is one of the form of asymmetric information, which causes…

Q: Government inspectors who check on the quality of services provided by retailers as well as…

A: Option a) is not right, moral hazard means one party (agent) variating their action after doing a…

Q: The adverse selectiOn death spiral, though a firm prediction 0I Akerlof's model, has never been…

A: The adverse selection death spiral has never been witnessed in practise, despite being a clear…

Q: What are the options to combat adverse selection in Bismark systems? Choose all that apply. Restrict…

A: The asymmetric information problem was discovered by the economists Stiglitz, Spence and Akerlof.…

Q: Show that expectation damages are efficient with respect to breach, but not efficient with respect…

A: Damages recovered by the non-breaching party as a result of a contract breach are known as…

Q: For each of the following scenarios, determine whether the decision maker is risk neutral, risk…

A:

Q: Anecdotal evidence suggests that some insurance companies in Germany advertise specifically to…

A: In the insurance market, it can be seen that there is high risk or more probability to have market…

Q: Automated Data Processing (ADP) provides computer software and services to a host of companies,…

A: The question involves how a company train its employees and how they are vulnerable even after…

Q: Besides the common practice of charging copayments, health insurers have no successful strategies…

A: Moral hazard refers to the risk associated with one part facing problems due to misleading…

Q: Which of the following is generally true of the experiments created by Kahneman and Tversky?…

A: Daniel Kahneman and Amos Tversky, 1979 proposed that losses cause a greater emotional impact on an…

Q: 1. Risk analysis allows assessment of future uncertain impacts, and incorporates uncertainty into…

A: Risk analysis relates to the uncertainty of predicted cash flow streams, the variation of portfolio…

Q: Indicate whether the statement is true, false, or unclear, and justify your answer.In some markets,…

A: Adverse selection refers the situation where there is a lack of information (asymmetric information…

Q: Which of the following statements is correct?   a. Adverse selection arises when one party to a…

A: In the free market, resources are optimally allocated by the forces of the demand and supply but due…

Q: BPO Services is in the business of digitizing information from forms that are filled out by hand. In…

A: The expected cost of digitizing a form would be, Expected cost = cost of form A× 0.5 + cost of form…

Q: Beta and volatility differ as risk measures in that beta measures only non‑systematic risk, while…

A: Risk is the possibility of future profits or outcomes deviating from expectations. It is the level…

Q: Which of the following is a method used by a private seller to help reduce imperfect information…

A: Answer: Imperfect information refers to the situation where either buyer or seller has less…

Q: BestDeal.com and CrazySavings.com are two online retailers with free return policies. They sell the…

A: Equilibrium price is the point where both supply and demand curve intersect each other.

Q: Explain how moral Hazard can lead to market failure.

A: Moral hazard refers to the situation which occurs when one party is willing to take a risk to earn…

Q: elect three services ?one high in search attribute,one high in experience attribute,and one high in…

A: Goods are described as items or commodities that can be seen, felt, or touched i.e tangible, and are…

Q: The discount policy may create a problem of moral hazard.

A: Since you have asked multiple questions, we will answer the first question for you. If you want any…

Q: In order to remain competitive, insurance companies must successfully address:     A. Adverse…

A: Adverse selection refers to th situation where one party know more information than the other party…

Q: Signaling theory assumes that all information in the market are not similar to all investors and…

A: Signalling theory refers to the the theory which tells that it is an idea that one party credibly…

Q: In Bismarck systems, patients are charged premiums based on their risk rating. True False

A: The Bismarck Model is a limited health-care system in which patients pay a fee to a fund, which then…

Q: In order to cope with high levels of supply uncertainty, a firm would use this strategy to reduce…

A: Supply: It refers to the goods and services supplied in the economy with the help of various…

Q: In the mean-standard deviation graph, the line that connects the risk-free rate and the optimal…

A: Answer: In the mean-standard deviation graph, the line that connects the risk-free rate and the…

Q: For each of the following scenarios, determine whether the decision maker is risk neutral, risk…

A: a.) The expected value of the project can be calculated as follows: Thus, the excepted value of the…

Q: Unethical or ethical: Falsification of facts in order to deceive or confuse?

A: Facts In economics facts is defined as "self-interest of an individual or small group"In other…

Q: If people get higher pay from insurance than their pre premiums. Will this increase or decrease the…

A: 1) If people get higher pay from insurance than their pre premiums that means the insurance company…

Q: Which of the following is an example of moral hazard? Group of answer choices A. Reckless drivers…

A: A moral hazard is a risk that is taken by one party while knowing that his or her act is protected…

Q: he transfer of Pure risk from one party to another best determines the idea of Proximate cause…

A: risk refers to the chance something harmful or unexpected would happen. the risk might involve the…

Q: To overcome the effects of asymmetric information, the party with more information could apply the…

A: Asymmetric information is the the situation of different information between the parties involved in…

Q: Describe the two problems arising from asymmetric information, namely:     Adverse selection; and…

A: Describe the two problems arising from asymmetric information, namely:     Adverse selection…

Q: Rice farming is risky and generates expected income of $100. The certainty equivalent associated…

A: Risk-averse: - it is a strategy or the nature of the person of avoiding risk involved in capital…

Q: Suppose in a given state's new insurance marketplace, with community rating and no restrictions on…

A: A form of risk management that practiced by the insurance companies known as risk pool.

Q: Whcih of the following could help overcome the problem of adverse selection in the used car market?…

A: The answer is - The government could enact disclosure laws requiring that potential buyers be told…

Q: The governments role in terrorism insurance is that of  - disinterested observer  - innocent…

A: Terrorism Insurance is related to the losses that occurs due to terrorist acts under the commercial…

Q: Adverse selection occurs because of      A) spreading of risks. B) diminishing marginal utility. C)…

A: Adverse selection occurs because of imperfect information, when the seller have information about…

Q: High deductible plans in the U.S. reduce adverse selection.

A: Adverse selection occurs when one party has more information than the other in case of a…

Q: Which of the following would help an insurance company to overcome the adverse selectic problem?…

A: Adverse selection is the situation in which sellers have more information than that of the buyers.

Moral Hazard

The moral is a person's behavior towards himself /herself, society, organization, and others. Hazard is something that is happening and is not good. A person may be morally good or bad. It depends on his attitude, ethics, integrity, and values. A person may have the highest reverence for money to that for the truth. In this case, the person may lie and it is said that the person is morally bad.