Solutions to Moral Hazard

What are some solutions to moral hazard? We could try to make information less asymmetric - meaning both parties have similar information, making it harder for one party to exploit the other. We could also try to reduce the incentive of the agent to exploit their information advantage. Online ratings and reviews on Yelp, Angie’s List, or Amazon, for instance, incorporate both of these solutions. The reviews give you more information about a product or service and close the information gap between buyers and sellers. In addition, sellers’ incentives change, as they now have to think about their reputation. They likely won’t want to exploit you if they know it will result in a negative online review.
What are some other approaches to modifying the incentives of those with an information advantage? One approach is to split the diagnosis of a problem from the actual work that needs to be done - for instance, home inspectors don’t fix the problems they identify during their inspection. Another approach is to alter the payment structure to change incentives. For instance, a lawyer is less likely to run up their hours when payment is contingent on winning your case as opposed to the number of hours they work on the case. Ethics also plays a role. Doctors swear to the Hippocratic Oath, which provides them an incentive to not exploit their information advantage. As you can see, there are many solutions to addressing moral hazard.
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[@ketypetrus4790]

Your videos on asymetric information helped me to prepare for my test I a short time, Thank you.

[@Customizelol]

Thank you for your great videos. The video in question is well explained in a easy way :) Very helpful!

[@vishva8kumara]

This is wonderful insight.!

[@nakuldeovanshi8040]

Your explanation is very easy to understand and the availablity of subtitles in Hindi language makes easier for Indian students. Really amazing experience. Please continue. Goodluck

[@hosseinfaridnasr2778]

Well well how the turntables LOL

[@CCCPmusik]

well explained

[@ghassantsabitrivai6491]

Nice video.. please make more

[@javiermoron8443]

Very good and useful information. I think it will be a good idea to have subtitles in other languages for example Spanish.

[@pragathesh2012]

All is well, but may i suggest using a different colour background like blue? The white seems too bright and overwhelming. :)

[@virakbothvong9443]

love it thanks

[@Nico2625]

Thank you

[@teresavargas4546]

I would like to have a Professor like you. :) Thanks Obrigada. Im from Portugal Internacional Business Bachelor

[@danwroy]

Very nice wokeness great JOB

[@goodcook9991]

i love that the auto mechanic is a woman.

[@Mujangga]

Her...?

[@khary30]

Mujangga it’s possible

[@Lyle-xc9pg]

Jason Morgan don't be ridiculous

[@a.r.hollowayauthor7210]

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[@sivvu_siv]

Hahaha

[@sivvu_siv]

@@Lyle-xc9pg y cant it be so?

[@Lyle-xc9pg]

OOOH, it's a she. I imagined a dude