Health Economics
Health Economics
14th Edition
ISBN: 9781137029966
Author: Jay Bhattacharya
Publisher: SPRINGER NATURE CUSTOMER SERVICE
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Chapter 6, Problem 6E
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Check whether the statement is true or false.

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Consider the following abstract from the following research paper “Do Social Connections Reduce Moral Hazard? Evidence from the New York City Taxi Industry” by C. Kirabo Jackson and Henry Schneider: “This study investigates the role of social networks in aligning the incentives of agents in settings with incomplete contracts. Specifically, the study examines the New York City taxi industry where taxis are often leased and lessee-drivers have worse driving outcomes [like gas overuse and accidents] than owner-drivers due to moral hazard… We find that drivers leasing from members of their country-of-birth community exhibit significantly reduced effects of moral hazard, representing an improvement… of the outcome measures.” 1. Thinking of moral hazard, draw an analogy between the taxi leasing industry and health insurance. Specifically, briefly highlight the following aspects Price distortion effects Behaviour change due to price sensitivity Information asymmetry Social loss 2. The paper…
Indicate whether the statement is true, false, or unclear, and justify your answer.Although a firm prediction of Akerlof’s model, the adverse selection death spiral has never been observed in practice.
Indicate whether the statement is true or false, and justify your answer.The RAND HIE found that people assigned to the free health plan had the same rate of hospitalization as people assigned to the cost-sharing plans.
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