(Solved):When insured baseball player Mr. X got hit on the hand by a fastball, he was given the option of 3 treatments. Comparatively each treatment is as effective as the other. The only difference is cost… View Answer…

 

Question

When insured baseball player Mr. X got hit on the hand by a fastball, he was given the option of 3 treatments. Comparatively each treatment is as effective as the other. The only difference is cost. Treatment C is the most expensive and Treatment A is the cheapest. Mr. X has full insurance and he chooses Treatment C. This is an example of

a.

ex-post moral hazard

b.

ex-ante moral hazard

c.

not a moral hazard

d.

none

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