Moral Hazard

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8 жыл бұрын

Imagine you take your car in to the shop for routine service and the mechanic says you need a number of repairs. Do you really need them? The mechanic certainly knows more about car repair than you do, but it’s hard to tell whether he’s correct or even telling the truth. You certainly don’t want to pay for repairs you don’t need. Sometimes, when one party has an information advantage, they may have an incentive to exploit the other party. This type of exploitation is called moral hazard, and can happen in many situations - a taxi driver who takes the “long route” to get a higher fare from a tourist, for example. In this video, we cover moral hazard and what is known as the principal-agent problem.
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Пікірлер: 37

@andrewstrauss7586 6 жыл бұрын

I am starting a petition to get all econ classes in the US to be taught by these guys.

@aertybhujm1 2 жыл бұрын

I am a Taiwanese English tutor in Taichung,Taiwan. After watching this video and learning this concept, I suddenly realized why I was sacked by a client 1.5years ago. She was in fear of being ripped off by me due to asymmetric information and moral hazard.

@FirebirdCamaro1220 7 жыл бұрын

moral hazard is the reason that insurance companies like to collect premiums, but not pay claims

@lindachen5179 4 жыл бұрын

Thank you. Love the examples and visuals

@lulugao1531 2 жыл бұрын

Love the video. Great content and easy to be understood!

@Randor11 5 жыл бұрын

This is a really precise and concise way of describing a moral problem which afflicts many many millions of people.

@danwroy 6 ай бұрын

@eisernfront8549 4 жыл бұрын

Grate example is current situation of the Corona Virus. Here in the states, most event organizers or employers arent preparing for the outcome of the outbreak. They will let their workers work until they get sick. Also,, their employees cant afford to get sick anyways coz they have bills to pay, cant afford to go to a doctor, and almost all dont have paid sick leave.

@treywright1743 2 жыл бұрын

you explained this much better than my Pearson textbook, thanks.

@kemalonatdursun7240 Жыл бұрын

My big brother, you explained very well, we undrestood thanks to your amazing examples on your videos

@tjaryma Жыл бұрын

There is a nice paper by Benjamin Hale What's so moral about moral hazard? in philosophy. He writes : In this paper, I argue that there is nothing inherently moral about the moral hazard, and in fact, that the so-called moral hazard is better understood as a central and inextricable feature of insurance and public policy more generally

@gfadhilla 6 жыл бұрын

Thank you so much, THIS IS REALLY HELPFUL. I'm going to present about this topic next week, wish me tons of luck!

@thekingprajna 4 жыл бұрын

Thanks a lot sir

@zubairkhan-hz1vz 5 жыл бұрын

Moral hazard is after the contract problem as per my knowledge.

@ronturford5744 Жыл бұрын

This is not the normal use of the term moral hazard. Moral hazard is lack of incentive to guard against risk. That it not what what is being described here.

@linkns1 2 ай бұрын

I have no idea why he's using this term for that definition. It's just not correct. Surely he knows this.

@beliziabrito Жыл бұрын

great content.

@alisaroo2234 5 жыл бұрын

What is the difference between priciple-agent prblems and moral hazards?

@Stray0 4 жыл бұрын

1:58 very relatable :D

@deforesttthompson9299 3 жыл бұрын

Got me googling "what is a johnson bar"

@LIMJINGHENGJURGENHCI Ай бұрын

thanks bruv u saved my butt the econs notes buggy 😢

@arvinthm6018 6 жыл бұрын

Isn't it a moral hazard, only if the mechanic does not fix my car properly though i have paid him for the damage to be fixed? otherwise wouldn't it be an example of adverse selection?

@brokentombot 4 жыл бұрын

I like he used the Johnson Rod example from Seinfeld.

@shiivanibhatt 3 жыл бұрын

Omg i knew i heard it somewhere😂

@Themistocles425 7 жыл бұрын

+1 for the Seinfeld reference!

@MarginalRevolutionUniversity 7 жыл бұрын

You should check out this one. Loaded with Seinfeld! kzfaq.info/get/bejne/gpN3otirtselnqM.html -Roman

@RahulKumar-wy8eq 3 жыл бұрын

Ur words are very similar to kotlers well i would gladly say at least i understood the video 🙏

@dylanroberts3869 6 жыл бұрын

Which of the following is NOT an example of ‘moral hazard’? A. Amy does not always bother to lock her bicycle, knowing that it is well insured. B. Knowing that he has comprehensive life insurance in favour of his family, Bill chooses to ski down the dangerous ‘black’ slopes on holiday instead of the safer ‘green’ ones. C. Caroline takes out life insurance, knowing that her smoking habit has given her terminal lung cancer. D. Having been granted debt forgiveness from the World Bank, the government of a developing country incurs new debt, expecting to be bailed out again if necessary. E. Knowing that his company has limited liability, a manager borrows heavily to pursue maximum growth.

@jatindersinghbhatti4308 5 жыл бұрын

I think the answer is C. She takes insurance after she finds out she has cancer. If she had taken life insurance first and then started smoking & gotten cancer then it'd be considered a moral hazard issue. Am I right?

@stevennaavee7519 3 жыл бұрын

C right?

@asseenonreddit5 3 жыл бұрын

yeh its C although im sure you needed the answer 3 years ago. C is adverse selection not moral hazard