Examples of moral hazard in the following topics:
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- In addition to adverse selection, moral hazards are also a result of asymmetric information.
- A moral hazard can occur when the actions of one party may change to the detriment of another after a financial transaction.
- For example, moral hazards occur in employment relationships involving employees and management.
- A lack of equal information causes economic imbalances that result in adverse selection and moral hazards.
- An insured driver getting into a car accident is an example of a moral hazard.
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- This is a classic case of moral hazard: the two parties deciding for the transaction to occur- patients and doctors- are not the same two exchanging money.
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- Food and Drug Administration bans harmful drugs, for example; the Occupational Safety and Health Administration protects workers from hazards they may encounter in their jobs; and the Environmental Protection Agency seeks to control water and air pollution.
- Key to Roosevelt's reforms was a belief that poverty usually resulted from social and economic causes rather than from failed personal morals.
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- Hazard pay is a type of compensating differential.
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- He wrote the Theory of Moral Sentiments in 1759 to describe his view of the role of sympathy and empathy in human behavior.
- On the first page of Theory of Moral Sentiments, Smith writes:
- Smith recognizes that beneficence and morality cannot be the only mechanism that creates order in society.
- The need for morality is based on biology and ecology; Joan Robinson argues:
- "Men of many ages have considered the Golden Rule to be the fundamental moral imperative.
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- Moral codes: Moral codes guide individuals' behavior.
- The likelihood of being fined may be small, but moral codes provide an incentive to refrain from littering.
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- These systems include (but are not limited to) economic, political, religious, social, geographic, demographic, legal, and moral systems.
- Adam Smith [1723-1791], Thomas Malthus [1766-1834] and David Ricardo [1772-1823]), economics was treated as part of philosophy, religion and/or moral philosophy.
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- Regulations were established to protect the public from airborne contaminants that are hazardous to human health.
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- Moral incentives: This occurs when a certain choice is widely regarded as the right thing to do, or as particularly admirable, or where the failure to act in a certain way is condemned as indecent.
- Societies and cultures are two main sources of moral incentives.
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- Religious and moral beliefs may alter the way in which knowledge is used.