Classify each of the following scenarios as an example of, Ask an Expert

Economics

PART 1: Classify each of the following scenarios as an example of adverse selection or moral hazard. Be sure to support your answer!

1. Nordstromâ€^TMs cannot predict who is going to be a good shoe salesperson.

2. A health insurance policy that has no deductibles and unlimited use of chiropractic visits is used to the maximum allowed by some patients.

3. Poor drivers seek out car insurance more than good drivers do.

4. Airline companies offer an expensive ticket that allows you to fly immediately and a lower-priced ticket with more flexible use.

5. CEOs shirk and do not maximize the companyâ€^TMs profits.

PART 2: Discuss why, if most people are risk-averse, they gamble. What do YOU think?

Also, please post at least two comments to your fellow classmates.

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Business Economics, Economics

Category:- Business Economics
Reference No.:- M9446006

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