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It’s a somewhat stupid example, because nobody endangers their own life just because they have health insurance. Smoking instead of reckless driving may make i
by matt4077 7y ago
It’s a somewhat stupid example, because nobody endangers their own life just because they have health insurance.
Smoking instead of reckless driving may make it (slightly) more understandable.
- mspecter 7y agoSure, though, to be pedantic, a common example of moral hazard is the increased likelihood of driving recklessly in the presence of mandatory seat belts. See https://web.stanford.edu/~leinav/pubs/RESTAT2003.pdf https://web.stanford.edu/~leinav/pubs/RESTAT2003.pdf
- matt4077 7y agoThat’s not a moral hazard. The word doesn’t even appear in the paper. It’s just an example of somewhat efficiently choosing a different point on the risk/reward continuum when the payoffs change. A moral hazard is choosing a selfish course of action with negative external effects.