Task

Work on this problem set in your groups and produce a consensus answer document (i.e., common document). Answer each question concisely but with detail, including calculations. Come to the point and be precise. Do not restate definitions.

Use only the information given in a question to answer that questionassume ceteris paribus unless otherwise specified.

Answer all questions correctly.

1. Every summer you attend a gathering of friends and family. On schedule, your brother-in-law (and former financial wiz) Biff always insists on playing chef. With long-handled utensils at the ready, Biff fires up the grill and proceeds with his usual 'scorched earth' approach to grilling. Those who are aware of Biff and his culinary acumen have the local pizzeria on their contact list, ready to text an order.

Could Biff's behavior be considered an example of Moral Hazard?Answer 'yes' or 'no' and explain your answer in under page.

2. Find an example of a news story from the last calendar year involving Moral Hazard. Describe the relevant players, who/what has committed the Moral Hazard, and the remedy that was used (if any). Find your story from one of the following: The New York Times, The Wall Street Journal, The Economist, The Washington Post, The Telegraph, The Guardian,Associated Press. Cite your sources. Keep your answer under page.