insurance and ineentives The eontracting model presented here is called a "hidden action" or "moral hazard" mode!. The latter term eomes from the insurance phenomenon where an insured subject has reduced care incentives. For example, is it Hkely that the owneroperator of an autornobile drives more diligently and less frequently when the auto's insurance has lapsed? Is the implied delieate balancing of risk sharing, or insurance, and proper incentives present in the labor input mode!? Explain, using the data in Table 18.2.

AppendixLO1