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Principles of Economics 2e

2nd Edition
Steven A. Greenlaw; David Shapiro
ISBN: 9781947172364

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BuyFindarrow_forward

Principles of Economics 2e

2nd Edition
Steven A. Greenlaw; David Shapiro
ISBN: 9781947172364
Textbook Problem

How do you think the problem of moral hazard might have affected the safety of sports such as football and boxing when safety regulations started requiring that players wear more padding?

To determine

The impact of moral hazard problem on safety of sports when the regulations require players to wear more padding.

Explanation

The term moral hazard defines a time in which people are willing to take more risk as the cost to that risk is less. In other words, the moral hazard situation occurs when the cost of insurance is less and the people take more risk than their normal capacity to take the risk.

Now, when the same condition applies to sports, it appears that the players will be able to take more risk while playing than the level of risk normally taken, as the risk to the injury will be less due to more padding provided to them...

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