Insurance policies typically stipulate a deductible amount which the insured must shoulder; this is to address the problem of: moral hazard public goods externalities adverse selection

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Journey Gonzales

Business

11 June, 07:01

Insurance policies typically stipulate a deductible amount which the insured must shoulder; this is to address the problem of: moral hazard public goods externalities adverse selection

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Pranav Chen · Answer 1

Based on the description above, this is being made to address the problem of moral hazard. Moral hazard is being defined as a situation in which there is a presence of parties involved that have no complete information to one another and that could be seen in a way of which one side of the party involves in a risky event whereas the other party incurs the cost.