Classify each of the following as examples of Moral Hazard, Adverse Selection or

Question

Classify each of the following as examples of Moral Hazard, Adverse Selection or a solution to a Moral Hazard or Adverse Selection problem. Explain both problem and the solution. 1) People who work for the EPA have an incentive to spend a long time reviewing the environmental impact of a new pipeline or other building project; indeed, the longer they take to review each project the more EPA jobs are needed. 2) The principle-agent problem 3) The EPA has the power to halt or delay pipelines or other building projects; thus, people who are opposed to such building projects are likely to want to work at the EPA in order slow or stop them. 4) A depressed individual might buy life insurance before committing suicide. 5) Stock holders may not get the optimal amount of dividends because profits are reinvested in the company in order to maximize the CEO

Explanation / Answer

this is the right answer.please rate this first

1)solution to moral hazard

2)moral hazard

3)Adverse selection

4)solution to moral hazard

5)adverse selection

6)solution to moral hazard

7)adverse selection

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