Tuesday, November 12, 2002

"Truck-School Loans Hit Rough Spot", WSJ November 12, 2002. Securitized school loans for truck-driving school have unprecedented default rates of 70%.  Why?  (a) Adverse selection among truck-driving students? (b) Perverse incentives on part of truck-driving schools? and/or (c) Perverse incentives on the part of the loan consolidator (SFC)? [Categories: Adverse Selection, Insurance, Moral Hazard] 3:32:22 PM    comment []

"Hyundai's Reputation Is Rising, As It's Proving in India and U.S.", November 12, 2002. [Categories: Demand, Other] Full disclosure: I bought a 2003 Hyundai Santa Fe yesterday. 3:25:56 PM    comment []

"After Managed Care: 'Consumer-driven' insurance plans promise to unleash the power of the market on health care", WSJ November 11, 2002. Consumer-driven insurance clearly seems designed to mitigate the moral hazard problem, that insurees will get more health care than they need.  What about the adverse selection problem, that only the sickest insurees will be attracted to the plans with the most benefits?  "Other consumer-driven insurance plans give the insurers more money for sick enrollees."  Will this policy align patients incentives to reveal their true health?  Would you suggest corporate adoption of such a health plan?   [Categories: Adverse selection, Insurance, Moral hazard] 3:22:48 PM    comment []

"The Best Car Deal Around: Never Paying for Repairs", WSJ November 12, 2002. [My assistant is out for the week; Apologies if articles are harder to read than normal.] [Categories: Adverse Selection, Insurance, Moral Hazard] 3:14:29 PM    comment []