Is Risk Taking or Moral Hazard Beneficial to the Insured and the Society?
25 Pages Posted: 1 Sep 2013 Last revised: 12 Jan 2017
Date Written: November 6, 2016
In this article, we discuss whether and when the risk taking and moral hazard is beneficial to the insured and to the society as well. We establish model by stochastic optimal control theory. We obtain the optimal levels of risk taking and moral hazard from perspectives of the insured and the society. Finally we make some discussions on insurance and moral hazard.
Keywords: Moral hazard, Stochastic optimal control, Social Welfare
JEL Classification: I20
Suggested Citation: Suggested Citation