Pearson eText Microeconomics -- Access Card
2nd Edition
ISBN: 9780136849513
Author: Acemoglu, Daron, Laibson, David, List, John
Publisher: PEARSON
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Chapter 16, Problem 8Q
To determine
Reason for creation of moral hazard for
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Explain how moral Hazard can lead to market failure.
Someone indicated that employee’s absence from work despite meeting the eight hours per day requirement affect productivity and increase cost of business. If an employee makes up the hours by coming early and leaving late, how can you call it an example of moral hazard when the manager can easily correct this behavior? Please explain to the class.
A Grab driver who does not own the car is very harsh on his driving as he knows
that the car is not his. Is this an example of a moral hazard problem? How does
moral hazard issue arise?
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Pearson eText Microeconomics -- Access Card
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- What would explain why moral hazard might not occur after the large gains in health insurance coverage?arrow_forwardCyclists travel faster on their bicycles when wearing helmets. Is this an example of adverse selection or moral hazard?arrow_forwardWhat is the impact of compromising certainty in the interest of justice? Are there particular applications in your line of work or your organization.arrow_forward
- Explain the term adverse selection and moral hazard and show how these lead to market failurearrow_forwardWhat is Moral Hazard, and how does moral hazard affect the likelihood a population demands medical care and the total demand for medical care?arrow_forwardHow 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?arrow_forward
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