Learn with AI

Choose 3–5 (or all) and ask AI the related question to explore real-world solutions.

1. Health Insurance Overuse

   Scenario: A patient with full-coverage health insurance visits the doctor for minor issues, unconcerned about cost.

   Ask AI: How can co-pays or deductibles reduce moral hazard in health insurance?

2. Bank Bailouts and Risk

   Scenario: A large bank, previously bailed out, resumes risky investments assuming future government support.

   Ask AI: How can financial regulations address moral hazard in banking?

3. Executive Golden Parachutes

   Scenario: A CEO takes risky bets. Even if the company collapses, they walk away with a $50 million severance.

   Ask AI: What are ways companies can reduce moral hazard for executives?

4. Company Expense Abuse

   Scenario: An employee uses a company credit card to book luxury hotels on business trips.

   Ask AI: How can organizations prevent overspending on expense accounts?

5. Unemployment and Job Search Delay

   Scenario: A worker delays job hunting because generous unemployment benefits meet their needs.

   Ask AI: What policies help balance support with incentives to return to work?

6. Home Contractor Cutting Corners

   Scenario: A contractor on a flat-fee job uses cheap materials to boost profit, assuming the client won’t notice.

   Ask AI: How can contracts or inspections reduce this kind of moral hazard?

7. Athlete With Guaranteed Contract

   Scenario: After signing a long-term guaranteed deal, an athlete slacks off during games.

   Ask AI: How can performance incentives help maintain effort?

8. Politician Spending Public Funds

   Scenario: A politician approves expensive projects for personal gain, knowing they won’t be held personally liable.

   Ask AI: What tools or rules reduce moral hazard in public spending?

Summarize the AI answers below:

Time to reflect. Which moral hazard example do you think is most difficult to solve in real life? Why?