Chapter 16: Q.21 (page 398)
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?
Players who wear more padding are willing to take further pitfalls as they're less vulnerable to injury.
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What are some of the metrics economists use to measure health outcomes?
Why is it difficult to measure health outcomes?
For each of the following purchases, say whether you would expect the degree of imperfect information to be relatively high or relatively low:
a. Buying apples at a roadside stand
b. Buying dinner at the neighborhood restaurant around the corner
c. Buying a used laptop computer at a garage sale
d. Ordering flowers over the internet for your friend in a different city
You are on the board of directors of a private high school, which is hiring new tenth-grade science teachers. As you think about hiring someone for a job, what are some mechanisms you might use to overcome the problem of imperfect information?
To what sorts of customers would an insurance company offer a policy with a high copay? What about a high premium with a lower copay?
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