The optimal insurance contract would be designed to balance the amount of social loss from moral...
The optimal insurance contract would be designed to balance the amount of social loss from moral hazard that accompanies having much insurance with the amount of social loss from exposure to risk that accompanies having less insurance.
True
False
Homework Answers
Solution: True
Explanation: More insurance would result to more social loss from moral hazard, and the less insurance would indicate higher social loss from risk to exposure. For perfectly balancing the trade-off optimal insurance contract will be designed
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The optimal insurance contract would be designed to balance the
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