Posts tagged as:

moral hazard

SIGTARP confirms: TARP an exercise in moral hazard

January 31, 2010

The Special Inspector General's report on TARP has been released from embargo. It concludes that TARP was unsuccessful, and even its (debatable) short-term corrections are overshadowed by the extent to which it has returned the economy to its previous bubble state -- "we are still driving on the same winding mountain road, but this time […]

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Moral hazard and the NFL

November 11, 2009

The WSJ asks, "Is It Time to Retire the Football Helmet?" With the debate about football head injuries and CTE swirling, some are wondering if wearing helmets is actually exposing players to greater danger than if their heads were exposed. Though seemingly counter-intuitive, the argument follows well-established moral hazard reasoning that some have perceived in, […]

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Economics 101: Market Failure (PPIP edition)

March 25, 2009

Back in Ec 10 we discussed the two principal forms of market failure: moral hazard and adverse selection. Both are forms of information asymmetries, and lead to a loss of surplus and general lack of efficient resource allocation. Moral hazard is the idea that if someone knows they are protected from risk, they will behave in […]

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