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Give the argument in terms of a principal-agent model

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Question: Many auto insurance policies have "uninsured motorist" provisions that pay the insured if his car is involved in a hit-and-run accident or one in which the other party does not carry insurance. Here moral hazard is reversed and threatens the insured person. Explain why, and give the argument in terms of a principal/agent model.

Reference no: EM131685689

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