Identify the Principal, the Agent and the Moral Hazard Inherent

question 25

Essay

Identify the principal, the agent and the moral hazard inherent in each of the following situations.
a.In order to reduce personal injury claims, insurance companies successfully lobby legislators to pass laws requiring the use of seatbelts in automobiles.
b.A university provides free employee health insurance, which reduces the direct cost to the faculty and staff of visiting the doctor and the dentist.

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Definitions:

Added Value Negotiating (AVN)

A negotiation strategy that focuses on increasing the overall value of the deal for all parties involved, instead of merely haggling over existing value or resources.

Nadler-Tushman Model

An organizational diagnosis model that focuses on understanding how changes in one part of the organization affect other parts, featuring input, process, and output components.

Environmental Events

Occurrences or changes in the natural or built environment that can significantly impact individuals, communities, and ecosystems.

Strategic Realignment

The process of adjusting an organization's strategic direction or focus to better meet its goals, often involving restructuring or changing priorities.