Note: This is post #67 in a weekly video series on basic microeconomics.
In the last post in this series we discussed a form of exploitation of information called moral hazard. What are some solutions to moral hazard? In this video by Marginal Revolution University, Tyler Cowen offers several potential fixes such as as countering asymmetric informational imbalances or reducing the incentive of the agent to exploit their information advantage.
(If you find the pace of the videos too slow, I’d recommend watching them at 1.5 to 2 times the speed. You can adjust the speed at which the video plays by clicking on “Settings” (the gear symbol) and changing “Speed” from normal to 1.25, 1.5 or 2.)
Click here to see other videos in the Introduction to Economics series.