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Sandra is a manager at Starlight Inc. She wants to upgrade the quality of Starlight's products. She calls for a meeting with the technical experts of her company and asks for suggestions on how to achieve this goal. She gathers information by listening to each of the experts. In this scenario, Sandra is involved in _____.
Employer-provided Health Insurance
Health insurance coverage offered to employees (and often their dependents) as part of an employment benefits package.
Self-insure
The practice of setting aside funds to cover potential losses rather than purchasing insurance from a third party.
Wellness Program
A coordinated and comprehensive set of health promotion and protection strategies implemented at the workplace, aimed at improving employee health.
Moral Hazard
Post-contractual increases in risky or negative behavior. Examples are reduced incentive to exercise care once you purchase insurance and reduced incentives to work hard once you have been hired. Moral hazard is similar to adverse selection in that it is caused by information asymmetry; it differs in that it is caused by hidden actions rather than hidden types.
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