Insurance: There is an opposition between the need to make individuals and companies accountable and the need to share risks effectively?
Economists argue that there is an opposition between the need to make individuals and companies accountable on the one hand, and the need to share risks effectively on the other (in regards to insurance and moral hazard). Can someone please explain what this statement means and what "opposition" is referring to??
- JuanBLv 72 months ago
"opposition" - make companies accountable is opposite view of share the risk.
What does it mean: Example: We all pay insurance to share the risk. But say a river floods every 5 years. And companies (or people) want to be along the river. Should they be allowed to get flood insurance? You know the river will flood and they will claim on their insurance and to pay for it, everyone's rates goes up, even us who stayed away from the river banks. They are doing high risk activities because they aren't accountable, everyone ends up paying.
- 2 months ago
Um...I am saying BULLSHIT on this. School is OUT.