Asked by Duong Quoc Huy (K14_HL) on Jun 30, 2024
Verified
An example of mechanism design is
A) a non-profit charity that pays all employees a low fixed salary.
B) welfare policy that has no limits on the amount of time a person can collect benefits.
C) health insurance with co-pays.
D) lower prices for airline ticket purchases made several months prior to the travel date.
Mechanism Design
A field in economics and game theory that seeks to design rules or incentives for a system to achieve a desired objective, considering individuals' private information and incentives.
Welfare Policy
A governmental strategy designed to support the wellbeing of citizens, often through financial aid, healthcare, and education.
Health Insurance
A type of insurance that covers the whole or part of the risk of a person incurring medical expenses, spreading the risk over numerous individuals.
- Apprehend the foundational concept and intention of employing mechanism design in economic activities.
- Differentiate among various economic systems and their implementation in practical situations.
Verified Answer
HB
Hamit BüyükgüzelJul 02, 2024
Final Answer :
C
Explanation :
Mechanism design involves creating systems or incentives to encourage desired behaviors. Health insurance with co-pays is an example because the co-pay mechanism is designed to prevent overuse of healthcare services by making patients bear part of the cost.
Learning Objectives
- Apprehend the foundational concept and intention of employing mechanism design in economic activities.
- Differentiate among various economic systems and their implementation in practical situations.