PB#16.docx - Which of the following is an example ofmoral...

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Which of the following is an example ofmoral hazard?a. Reckless drivers are the ones most likely to buy automobile insurance.b. Retail stores located in high-crime areas tend to buy theft insurance moreoften than stores located in low-crime areas.c. Drivers who have many accidents preferto buy cars with air bags.d. Employees recently covered by the company health plan start going to thedoctor every time they get a cold.D
A salesperson can put in regular effort (resulting in a 40% chance of sale) or higheffort (60% chance of sale). If high effort costs the salesperson $20 more thanregular effort, how large a per-sale bonus is required to encourage high effort?
Which of the following isnotan example of a process designed to combat moralhazardproblems?
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Term
Spring
Professor
eric harter
Tags
Project Management, Information asymmetry

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