Moral Hazard is a term used in the insurance market originally. Policyholders who have fire insurance if were not in insurance, he would neglected the duty of care for fire prevention that will be not ignored, so fire occurs rather, the insurance company is likely to pay the insurance money. If the insurance company is able to grasp all one by one the efforts of fire prevention of the policyholder, apply in a different way the premium in accordance with the efforts of fire prevention, or refuse to join itself to insurance, but this is impossible in practice.
In this way, the insurance companies can’t caught insured separately situation refer as "asymmetry of information". In the asymmetric situation of information, the possibility of moral hazard occurs always large.
The "moral hazard", when principal can not to observe fully the behavior of the agent in situations where there is asymmetry of information, it appears in the process of agent is to maximize the utility of their own in economics. For example, if the monitoring is neglect to workers, that they are not eager to work, those who have insurance to reduce the care that was provided in the accident, doctors were gave a lot of medical insurance by over-practice All of this corresponds the moral hazard.
Entrepreneur, insurance companies, medical insurance institutions mainly principal here and the workers, people in insurance, doctors are agent but it is not intended to mean what status relationship with a vertical, It only indicates that an simply different object of each other. And recently, It expressed as "moral hazard" profit exploiting the loopholes of law and institutions, attitudes to neglect the self-responsibility, and also to group selfishness.
No comments:
Post a Comment