Microeconomics: Risk Taking
Covering Risk or Risky Behaviors? (7/27/2000)
The insurance solution to risky behaviors, such as smoking and underage driving, is to raise premium to discourage such behaviors and not to subsidize the treatment of such behaviors.
The insurance solution to risky behaviors, such as smoking and underage driving, is to raise premium to discourage such behaviors and not to subsidize the treatment of such behaviors.
Crystal Ball (6/22/2006)
Better information on risky events may lead to market failure due to adverse selection.
Better information on risky events may lead to market failure due to adverse selection.
Easy Money (12/21/2001)
If the insured takes less care to prevent loss, the insurer might be subject to unanticipated loss because of such moral hazard.
If the insured takes less care to prevent loss, the insurer might be subject to unanticipated loss because of such moral hazard.
Framing Perceptions (6/22/2006)
Since people are risk-averse with respect to gain and risk-seeking with respect to loss, their choices can be easily manipulated by whether an offer is framed as a gain or a loss.
Since people are risk-averse with respect to gain and risk-seeking with respect to loss, their choices can be easily manipulated by whether an offer is framed as a gain or a loss.
Grade A Material (8/1/2002)
In the absence of perfect information, insurers charge premiums according to classes of risks rather than individual risks.
In the absence of perfect information, insurers charge premiums according to classes of risks rather than individual risks.
Heads I Win, Tails You Lose - Painless Risk Taking (8/31/1999)
The heated stock market for high-tech startups has spawned many newly rich through riskless stock options.
The heated stock market for high-tech startups has spawned many newly rich through riskless stock options.
Health Risk is a Matter of Life and Death (6/22/2006)
Health insurance premiums tend to be high for individual policies because of adverse selection and moral hazard.
Health insurance premiums tend to be high for individual policies because of adverse selection and moral hazard.
Insurance at Risk (11/10/2000)
Genetic test results on fatal diseases could lead to adverse selection of membership in life and health insurance if unfavorable results are concealed from insurers.
Genetic test results on fatal diseases could lead to adverse selection of membership in life and health insurance if unfavorable results are concealed from insurers.
Joint Liability as Loan Collateral (8/16/2000)
The Grameen Bank in Bangladesh uses joint liability as a screening device to overcome insufficient information on the soundness of individual loan projects and to circumvent the dangers of providing loans without collateral among the poor.
The Grameen Bank in Bangladesh uses joint liability as a screening device to overcome insufficient information on the soundness of individual loan projects and to circumvent the dangers of providing loans without collateral among the poor.
Risk Shifting (6/22/2006)
Defined-contribution pension plans increase labor mobility and facilitate the revival of old businesses in the face of massive industrial restructuring and longer life expectancy.
Defined-contribution pension plans increase labor mobility and facilitate the revival of old businesses in the face of massive industrial restructuring and longer life expectancy.
