Author Question: In the prisoner's dilemma: a. the outcome obtained when both confess is worse for each than the ... (Read 36 times)

jlmhmf · **on:** Jun 30, 2018

In the prisoner's dilemma:
a. the outcome obtained when both confess is worse for each than the outcome they would have obtained had they both remained silent.
b. whatever the other does, each is better off confessing than remaining silent.
c. we see a conflict between group and individual rationality.
d. all of the above

Question 2

Mention some of ways in which insurers control the problem of moral hazard.

mmj22343 · **Reply #1 on:** Jun 30, 2018

Answer to Question 1

d

Answer to Question 2

Insurance and other contracts often contain provisions designed to reduce the attractiveness of morally hazardous behavior. To avoid defeating the purpose of insurance, these provisions attempt to raise the costs of making claims that the policyholder can control, while still allowing recovery for major uncontrollable incidents. Co-payment or coinsurance, deductibles, and non-price exceptions are some of the provisions used by insurers to control the problem of moral hazard.