7. George Akerlof, Michael Spence, and Joseph Stiglitz were awarded the 2001 Nobel prize in economics for their research on (a) contracts with moral hazard (b) hyperbolic discounting and intertemporal preferences (c) incoherent probability judgments and Dutch books (d) markets with asymmetric information

7. George Akerlof, Michael Spence, and Joseph Stiglitz were awarded the 2001 Nobel prize in economics for their research on (a) contracts with moral hazard (b) hyperbolic discounting and intertemporal preferences (c) incoherent probability judgments and Dutch books (d) markets with asymmetric information

ENGR.ECONOMIC ANALYSIS

14th Edition

ISBN:9780190931919

Author:NEWNAN

Publisher:NEWNAN

Chapter1: Making Economics Decisions

Section: Chapter Questions

Problem 1QTC

See similar textbooks

Similar questions

Match the situation with its most appropriate label. Use each answer only once. ✓ Only sick people purchase health insurance ✓ I'm not as careful with my laptop computer because it is insured ✓ Company employees make personal phone calls during work hours. ✓ A self-employed stock broker rents office space in the most expensive building in the city. A. Adverse selection B. Signaling C. Principal-agent problem D. Moral hazard
1. What are the four pillars of Moral Education in teaching and learning? What are the benefits of morality? How are moral values helpful to develop a better community? Justify with reasoning by highlighting
Suppose low-risk individuals are risk-averse enough to fully insure at premiums high enough for insurers to cover both high and low-risk individuals. This is an example of a _____ equilibrium and is an ______ outcome. a-pooling/inefficient b-pooling/efficient c-separating/inefficient. d-separating/efficient
20-4. Suppose that every driver faces a 1% probability of an automobile accident every year. An accident will, on average, cost each driver $10,000. Suppose there are two types of individuals: those with $60,000 in he bank those with $5,000 in the bank declare bankruptcy if they get in a accident. In bankruptcy, creditors receive only what individuals have in the bank . What is the actuarily fair price insurance? What price individuals wit $5,000 in the bank willing to pay or the insurance? Will those with $5,000 in the bank voluntarily purchase insurance? What is the effect of state law forcing individuals to purchase auto liability insurance?
QUESTION 48 A recent study demonstrated that when states pass laws mandating that health insurance cover treatment for alcoholism, alcoholism rates in the state as well as alcohol related medical issues and drunk driving increase significantly. This is an example of: A. Adverse selection B. Risk spreading C. Moral hazard D. Opportunism
25. Which of the following is the best example of a moral hazard problem? Question 25 options: a) A borrower uses the proceeds of a business loan to gamble at a Las Vegas casino. b) A borrower decides to borrow at a fixed rather than a variable interest rate. c) A bank has difficulty in distinguishing between good and bad credit risks. d) A borrower makes all of her payments despite a downturn in her business.
Alana wishes to obtain auto insurance. She wants 100/300/100 liability coverage, $250 deductible collision and full coverage comprehensive. She lives in territory 2 and has been assigned to driver class 2 with a rating factor of 1.25. Based on Table 19-6 and Table 19-7, what would be her total premium, if her three-year-old car were in model class L? (Round your answer to the nearest cent.) a. $355.00 b. $365.00 c. $456.25 d. $465.38
Answer question 4, refer to attached image below for details.
1) A key difficulty facing insurance companies is that people know more about their health than do insurance companies, and that those people who are seriously ill are the most likely to want to obtain health insurance. What is this phenomenon called? A) moral hazard B) economic irrationality C) asymmetric information D) adverse selection 2) An insurance company is likely to attract customers like Clancy who want to purchase insurance because he knows better that the company that he is more likely to make a claim on a policy. What is the term used to describe the situation above? A) moral hazard B) adverse selection C) asymmetric information D) economic irrationality 3) The term that is used to refer to a situation in which one party to an economic transaction has less information than the other party is A) inefficient market hypothesis. B) moral hazard. C) information disparity. D) asymmetric information. 4) Which of the following parties is…
Which of the following is NOT an example of moral hazard? Joey borrowed $20,000 from a bank to open a coffee shop but he actually spent the money to buy a fancy race car. O A man with a family history of high blood pressure buys a health insurance policy. A homeowner with fire insurance on the house smokes in bed. O A bank with a high leverage carries out reckless investment plans.
6-1- What is consumer behavior? Why is it important for marketers to understand consumer behavior?6-2- Explain habitual decision making, limited problem solving, and extended problem solving. What is the role of perceived risk in the decision process?6-3- Explain the steps in the consumer decision-making process?6-4- What is perception? Explain the three parts of the perception process: exposure, attention, and interpretation.6-5- Describe Maslow’s hierarchy of needs as it relates to motivation. How does gamification satisfy some of these needs?6-43- What is the decision facing Electrolux?6-44- What factors are important in understanding this decision situation?6-45- What are the alternatives?6-46- What decisions(s) do you recommend?6-47- What are some ways to implement your recommendation?