Essays on Moral Hazard

American Public University

1. Consider the nature of the trade-off between richness and reach of information. How is the trade-off defined? Give a real world example to qualify for the maximum possible credit. The trade-off between richness and reach of information means that reaching information at the different level of richness might cost differently. If someone would like to reach information, he needs to pay for this service, and the price depends on the richness of the information requested (Nayab, 2014). Advanced communication and information technologies have decreased the cost of reaching rich information nowadays; however, it does not mean we do ...

CHAPTER II

This chapter will seek to conduct an absolute inquiry into what makes up security interest laws in the United States. In order to lay the foundation for comparisons in subsequent chapters, the three main elements of the study of the Saudi system will be reviewed here in the context of U.S laws with an emphasis on California state law. The features of the California legal system will include the assessment of foreclosure rules and patterns in California. This will include a detailed fact-based evaluation of CCP580 (b), CCP580 (d) and CCP726 (a). The different components will enable the study ...

The core values St. Leo’s represents is applicable to the debate surrounding the ACA. St. Leo represents and firmly believes in community and integrity. The ACA is reportedly designed to provide for the welfare of the community, meaning Americans at large. The issue surrounding the ACA is that many say the provisions lack integrity due to various different reasons. Regardless of these issues, integrity is often defined as doing the right thing, even when no one is watching. World leaders and policy makers have a responsibility to maintain integrity to benefit the communities in which they live, whether ...

Human Resource Management (HRM) refers to the practices and knowledge within an organization that is concerned with the organization’s primary responsibility and employment relations (Redman, & Wilkinson, 2009). As such, it is a discipline that is guided by numerous models that include Guest, Harvard, Warwick, Storey, and Fombrun models. The Guest model developed by David Guest contends that the HR manager is initially presented with specific strategies which then create a need for certain practices within the organization in order to achieve the desired outcome. It bears six aspects that include HRM strategy and practices as well as behavior, ...

Moral hazard in equity contracts

In some instances, the seller of security is driven by incentives to conceal information from the purchaser and may engage in detrimental activities. This constitutes the problem of moral hazard in equity contracts. An example is the problem of Principal-Agent, which concerns the separation of possession and management of firms. The executives in corporations in this case only own a small share of the firm compared to the principals/share-holders. The managers then opt to pursue their interests at the expense of the firm's profitability bringing about a conflict of interest between the shareholders and corporate management (Banerji, and Basu ...

Saudi Arabia is one of the richest country in the world, specifically because of its oil-rich land which drives its economy. It has also one of the highest per capita income in the world. In 2008, the per capita income was estimated to have been US$ 24,000. Along with its economic and financial growth, the country has also invested largely in healthcare services, specifically for its constituents. As a testament to such, the World Health organization has ranked Saudi Arabia 25th, out of 190 countries (The Patient Factor, n.d.). The country first forayed into public health in 1925. ...

Introduction

The usefulness of psychology stands above the common knowledge of people. It has wide application in business, particularly in marketing. The study of human psychology helps the business people to understand the emotional behavior of their clients, leading to improved capacity to influence customers’ decisions. Impulse buying is one of the essential psychological applications in the business (Bhakat 149). It results from emotional changes in the decisions of consumers that result in increased purchases than what was initially intended. According to Bhakat (149), having experience in buying is crucial to improving the quality of purchasing decisions. However, such experience ...

1.0. Introduction Every business is exposed to small and big risks in its internal and external business environment and risk management strategies are directed to eliminate, avoid, or manage these risks. An effective mechanism for risk management ensures the long term survival, growth, and profitability of an organization. The importance of risk management is peaking in the modern business climate that is much more characterized by uncertainties and risks than its classical form. Financial institutions, as well as all other types of organizations, are also faced with certain threats within their business life, and several of them, if not ...

Introduction to Economic Thinking

Introduction to Economic Thinking

Aside from the obvious economic regulations of demand for health services, the existence of health insurance has effects on demand for health care goods as well as the services. Health insurance assumes the role of buffering between consumers as well as the healthcare costs goods and services (Folland & Stano, 2007). From the perspective of an insured consumer, healthcare goods as well as the services cost less because of providing full prices; the consumer might simply be in a position of paying, for instance, a co-insurance rate of 20 percent, after satisfaction to the deductible. For ...

The Patient Protection and Affordable Care Act (PPACA) became a federal statute in March of 2010 (H. R. 3590, 2010). The PPACA required that group health plans and health insurance issuers cover all applicants for health insurance without regard to pre-existing conditions or sex of the applicant. Dependent insurance is required to cover uninsured children up to the age of 26. The PPACA further required that group health plans and health insurance issuers provide a stipulated minimum standard benefit at the same rates for everyone. Subsidies were available for eligible individuals, small business, and families. Government subsidies were made ...

The Savings and Loan Crisis, or commonly known as S&L, is termed as one of the largest financial crisis in the United States history. The crisis began in the late 1970s, and its impacts on the economy were felt in the 1980s and ended in the early 1990s. Various sources have indicated the causes of the S&L crises. Some of the documented reasons include high and volatile interest rates during the period, the phase-out and its elimination, negative regional economic conditions, and federal and state deregulation of depository institutions. Other reasons include deregulation of the thrift industry, declining regulatory ...

The institutional affiliation

1. An effective threat is cheaper that an effective promise. Explain why this is true. Provide a specific example. Threats and promises are regarded as two main strategic moves used to impact the behavior and actions of others in a bargaining relationship. That type of relationship is considered as a situation where an individual is trying to influence another person’s option of action (McClintock, Stech, & Beggan, 1987). Both threats and promises can be employed within a game-like situation to message a plan of cooperation or to operate other ("Threats, Promises, and Commitments", 2016). For instance, when a parent ...

Part A: Multiple Choice Questions:

The seller must have market power, that is the seller must have some control over price The seller must be able to identify different customer groups with different demand elasticities The seller must be able to prevent arbitrage between the two groups All of the above You’ve just decided to add a new line to your manufacturing plant. Compute the expected loss/profit from the line addition if you estimate the following:

There is a 70% chance that profits will increase by $100,000.

There is a 20% chance that profits will remain the same. There is a 10% chance that profits will decrease by $15,000. Loss of $15,000 ...