The Two Major Problems Caused by Asymmetric Information Are the Moral-Hazard

question 46

True/False

The two major problems caused by asymmetric information are the moral-hazard problem and the principal-agent problem.

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Definitions:

Life Insurance

A contract between an insurance policyholder and an insurer, where the insurer promises to pay a designated beneficiary a sum of money upon the death of the insured person.

Patient Self-Determination Act

A federal legislation that ensures patients in healthcare facilities receive information about their rights, including advance directives and the refusal of medical treatment.

Health Care Providers

Entities, including professionals and organizations, that offer medical services to treat and manage patients' health.

Advance Directive

A legal document in which an individual specifies decisions about their healthcare, should they become unable to make these decisions in the future.