Regarding health care insurance providers as the asymmetric example - Can you ex

Question

Regarding health care insurance providers as the asymmetric example - Can you explain Is there a wealth creating transaction not consummated as a result of the asymmetric information if so old you consummmate them compute the profit consequences of any advice . Regarding health care insurance providers as the asymmetric example - Can you explain Is there a wealth creating transaction not consummated as a result of the asymmetric information if so old you consummmate them compute the profit consequences of any advice .

Explanation / Answer

Part of my job involves enforcing OSHA (Occupational Safety Health Administration) standards in hazardous workplaces. As government employees I see how having access to health care along with having PPE (personal protective equipment) creates a moral hazard as well as adverse selection for the employee’s. For example there are many employees that work in these environments that show moral hazards by not following proper protocol as they think they are well protected by their routine and will be fine when no one is around enforcing the rules (hidden information about the type of individual you’re dealing with), no different than the books example of car insurance, where drivers drive more recklessly knowing they have insurance to cover their loss. The adverse selection comes from the shops that train and educate staff on proper procedure but still turn a blind eye at times when proper procedures are not being followed. The source of the asymmetric information is the employees that need to be motivated differently, this is where my job comes in completing work place investigations during mishaps to teach others, firsthand how important it is to follow OSHA standards.

There are no wealth-creating transactions in my example how ever there is the monetary value of funds loss covering damaged equipment, losing employee to injuries etc. The recommendation I would give to hazardous shops is that they need to enforce and monitor their employees at all times to prevent a mishap, find what motivates their employees and get them involved in safety to prevent complacency as the book stated they need to anticipate moral hazard with less experienced employees.

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