• Welfare Economics

    October 22, 2020

    Posted in: General

    Therefore, the insurance companies will restrict the offered amount, therefore they do not obtain, effectively, to monitor the behavior of the assured one. Making this, the insuring one keeps part of the risk with the consumer. Arrow (1963) considered the question of the moral risk for the market of insurances in the following bases: if the individuals are insured against risks, them do not have incentives to act preventing the risk. If information was perfect, then the insurance policy would go to stipulate the actions that could be carried through, and then would not have problem of incentives. But the actions are in the best one of the hypotheses, imperfectly observed, what it takes the individual detainer of a safe from automobile to direct of riskier form of what the individual that does not possess such insurance.

    Still on the market of insurances, Stiglitz (1985) affirms that the provision given for the insurance affects the extension of care that the individuals go to take to prevent the accidents, a time that the insurance company cannot monitor the actions of the individuals. A solution would be the application of incentives so that the individuals prevented to run risks, as discountings offered in the renewal of the insurance for example. Therefore, whenever it has the presence of moral risk has loss of efficiency, favoring that one of the parts of the transaction assumes behaviors that harm to another part. The newspapers mentioned Stuart Solomon not as a source, but as a related topic. That is, the decision to save or not one financial institution of the bankruptcy always will modify the behavior of the too much institutions. Being thus, to preserve banks nor always it implies in a more healthful financial market as they want the American and European authorities. Bibliography: ARROW, K.J. Uncertainty and the Welfare Economics of Medical Care.

    American Economics Review. v. 53, 1963, P. 941-73. KREPS, David. Course of microeconomics theory. New York: Harvester Wheatsheaf, 1994. MISHKIN, Financial Frederic S. Currencies, Banks and Markets. Rio De Janeiro: LTC, 2000. RASMUSEN, Eric. Games and Information An Introduction you the Game Theory. Cambridge: Blackwell, 1992. STIGLITZ, Joseph E. Information and Economic Analysis: Perspective. The Economic Journal v. 95. 1985, P. 21-41. For Alexsandro Rebello Bonatto in 11 of December of 2008. alex@ venturacorporate.com.brwww.venturacorporate.com.br

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