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This results in a market failure, meaning that the wage is not being set according to the labor market's needs or preferences. A behavior of the insider-outsider model is illustrated at right, where Nd represents the optimal level of employment of labor firms and Ns represents the quantity of labor time workers desire to supply at a given wage ...
Coordination failure can lead to an underemployment equilibrium. [3] Coordination failure also implies that fiscal policy can mitigate the effects of recessions, or even avoid them entirely, by moving the economy to a higher-output equilibrium. [3] [4] In game theory, coordination failure can also be analyzed by focal point (game theory). Focal ...
In the principal-agent model it is argued that an agent will choose a large (observable) investment level when he has a strong outside option. Yet, an agent with a weak outside option might try to bluff by also choosing a large investment, in order to make the principal believe that the agent has a strong outside option (so that the principal ...
Use a captive agent: If you like a particular insurance company or have other lines of insurance through a specific company and want to bundle coverages, consider using a captive agent from that ...
Stiglitz and Rothschild showed that in an insurance market, firms have an incentive to undermine a 'pooling equilibrium', where all agents are offered the same full-insurance policy, by offering cheaper partial insurance that would only be attractive to the low-risk types, meaning that a competitive market can only achieve partial coverage of ...
Gov. Gavin Newsom is proposing a bill that would require the state Department of Insurance to review rate-hike requests from home insurers within 60 days as companies pull back from the market due ...
In neoclassical economics, market failure is a situation in which the allocation of goods and services by a free market is not Pareto efficient, often leading to a net loss of economic value. [ 1 ] [ 2 ] [ 3 ] The first known use of the term by economists was in 1958, [ 4 ] but the concept has been traced back to the Victorian philosopher Henry ...
"The sharp rise in auto insurance rates reflects a true collision of several challenging factors, all of which leave drivers in a less-than-optimal place: having to pay more than they expected for ...