Below is an excerpt of the abstract of a recent journal article entitled "Do social con nections reduce moral hazard? Evidence from the New York ICit')r taxi industry" by C. Kirabo Iackson and Henrir Schneider {201 1}: We investigate the role of social networks in aligning the incentives of agents in settings with incomplete contracts. We stud}:r the New York City taxi industryr where taxis are often leased and lessee-drivers have worse driving outcomes [like gas overuse and accidents] than ownerdrivers due to a moral hazard associated with incomplete contracts. We nd that . . . drive rs lea sing from members of their country-of birth community exhibit signicantly reduced eiects of moral hazard . . . a Draw an analogy between health insurance and taxi leasing in terms of moral has ard. In each case, highlight the price distortion, the behavior change due to price sensitivity, the inf ormation asymmetry, and the form of the social loss. in The researchers nd that moral hazard is reduced when lessor and lessee share a country.r of birth {most lessors and lessees in the NYC taxi industrv are immigrants to the US. so participants in the market come from manv different countries). c The researchers nd that the effect seems to be due to social sanctions against drivers with bad outcomes. Does this mechanism operate through price distorr tions, price sensitivity. or information asvmmetries