Lecture+25+quiz

Lecture+25+quiz - C The False Action Problem D The Moral...

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Question 1: What do we call the problem of consumers changing their behavior after entering into a contract in a way that changes the value of the contract to the firm? A. The Adverse Action Problem. B. The Adverse Selection Problem. C. The False Action Problem. D. The Moral Hazard Problem. E. The Pre-post Problem. Quiz: Question 2: What do we call the problem of firms not knowing what type consumers are, and thus not knowing how much it will cost to provide a contract? A. The Adverse Action Problem. B. The Adverse Selection Problem.
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Unformatted text preview: C. The False Action Problem. D. The Moral Hazard Problem. E. The Pre-post Problem. Quiz: Question 3: In a competitive insurance market with asymmetric information and a self-selecting separating equilibrium, what is the nature of the inefficiency? A. The high-risk type could do better without anyone being made worse off. B. The low-risk type could do better without anyone being made worse off. C. The firms could do better without anyone being made worse off. Quiz:...
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This note was uploaded on 02/07/2011 for the course ECON 100A taught by Professor Woroch during the Fall '08 term at Berkeley.

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Lecture+25+quiz - C The False Action Problem D The Moral...

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