Identify Whether Any of the Following Situations Is a Moral

question 31

Essay

Identify whether any of the following situations is a moral hazard, adverse selection, or principal-agent problem. Explain your reasoning in each case.
a. A person in poor health purchases life insurance.
b. A consumer is taxed on the purchase of a carton of cigarettes.
c. A driver purchases auto insurance and then drives more recklessly.
d. A computer programmer works from home on a fixed salary.

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Definitions:

Organizational Structure

The system of tasks, workflows, reporting relationships, and communication channels that link the diverse parts of an organization.

Marketing Plan

A comprehensive document or blueprint outlining a business's marketing strategies, efforts, and campaigns for a specific period.

Marketing Strategy

A comprehensive plan formulated by businesses to achieve specific marketing-related goals and objectives through various actions and campaigns.

Strategic Choices

Decisions made by an organization to determine the direction of its activities, involving the selection of markets, determining competitive positioning, and allocation of resources.