Solutions to the Problems Created by Moral Hazard Include

question 131

Multiple Choice

Solutions to the problems created by moral hazard include:

• A)offering salespeople in stores a straight salary rather than a commission on sales.
• B)setting up many stores and restaurants that are part of a national chain as franchises, with the owner undertaking quite a lot of risk.
• C)allowing property owners to overinsure their buildings.
• D)diversification.

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Definitions:

Dialogue

A focused conversation or exchange of ideas aimed at reaching understanding or resolving differences.

Tactics and Ploys

Strategic maneuvers or schemes used in negotiations or other situations to gain an advantage.

Correct One

The act of making something accurate or right, often by correcting errors.

Ultimatum Game

A game in economic experiments where one party proposes how to divide a sum of money with another party, who then accepts or rejects the proposal.