Moral hazard
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Suppose the Sri Lanka government awarded contracts to private companies to rebuild the countrys infrastructure damaged by the tsunami and it based its contracts on a percentage of the cost of the reconstruction. Would this constitute a moral hazard? If so, what would the government need to do to prevent such a problem?
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Suppose the Sri Lanka government awarded contracts to private companies to rebuild the country's infrastructure damaged by the tsunami and it based its contracts on a percentage of the cost of the reconstruction. Would this constitute a moral hazard? If so, what would the government need to do to prevent such a problem?
Sri Lanka government awarded contracts to private companies to rebuild the country's infrastructure damaged by the tsunami.
The first step is to understand that the percentage of ...
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