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MORAL HAZARD AND UNCERTAINTY 1. Solve the case of Moral hazard and uncertainty. See table below: 2. Make cases when insurance is or is not
MORAL HAZARD AND UNCERTAINTY 1. Solve the case of Moral hazard and uncertainty. See table below: 2. Make cases when insurance is or is not included. Analyze your results. 3. For both cases, alter the probabilities of having an accident or not having an accident if you drive carefully or not. Specifically, you have a 30% chance of having an accident if you drive carefully and a 70% chance of not having an accident if you drive carefully. Reverse these percentages if you drive carelessly. 4. Do your initial results change, i.e., does having insurance change the person's incentive to drive without caution
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