Co-Payments and Deductibles Provide a Means of Reducing Moral Hazard

question 77

True/False

Co-payments and deductibles provide a means of reducing moral hazard problems because they allow each party in the transaction to share in the costs.

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Definitions:

Informal Contract

A contract that requires no formalities. Also called simple contract.

Formal Contract

A contract that must have a special form or must be created in a specific manner.

Simple Contract

A contract that is not a formal contract. Also called an informal contract.

Third-Party Beneficiary

A third-party beneficiary is a person who, although not a party to the contract, stands to benefit from the contract's execution or has rights that can be enforced under the contract.