09 Jul methods that can correct the problems of asymmetric information
I need to find an example of adverse selection. Is the following an example of adverse selection?
- My company offers two dental plans. One with $2,000 in orthodontia coverage and the other with only $500 in orthodontia coverage. Those who have orthodontia needs obviously select the plan with the higher coverage amount.
I need to find an example of moral hazard. Would the following be considered an example of moral hazard?
- Benefits continue through the end of the month that an employee terminates. a terminated employee can choose to have elective surgery, or engage in dangerous behavior because they have the luxury of benefits through the end of the month.
Finally, what methods can correct the problems of asymmetric information and how do I tie the solutions to the examples above?
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