Microeconomics, Student Value Edition (2nd Edition)
2nd Edition
ISBN: 9780134461786
Author: Daron Acemoglu, David Laibson, John List
Publisher: PEARSON
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Question
Chapter 16, Problem 5Q
To determine
Elaborate on the following terms:
(a) Principal-agent relationship
(b) Moral Hazard
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Identify each of the following as an adverse selection or a moral hazard problema. A person with car insurance fails to lock his car doors when he shops at a mall.b. A person with a family history of cancer purchases the most complete health coverage available.c. A person with health insurance takes more risks on the ski slopes of Aspen than he would without health insurance.d. A college professor receives tenure (assurance of permanent employment) from her employer.e. A patient pays his surgeon before she performs the surgery.
Cyclists travel faster on their bicycles when wearing helmets. Is this an example of adverse selection or moral hazard? Explain your answer.
In the health insurance market, moral hazard occurs when
A.) chronically ill people refuse appropriate medical treatment.
B.) chronically ill people buy insurance.
C.) patients sue their doctor.
D.) chronically ill people cannot buy insurance.
E.) providers overtreat patients..
Chapter 16 Solutions
Microeconomics, Student Value Edition (2nd Edition)
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- What would explain why moral hazard might not occur after the large gains in health insurance coverage?arrow_forwardThe government can help solve the problem of adverse selection in each of these ways EXCEPT: a. reducing the need for insurance. b. requiring that everyone buy insurance. c. providing incentives for buyers to reveal private information. d. providing insurance.arrow_forwardWhat are some strategies for reducing adverse selection in insurance markets? What sorts of problems do these solutions cause?arrow_forward
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