In each of the following cases, identify whether the problem is adverse selection or moral hazard, and explain your answer. How might the problem be dealt with?
a. Rick has gotten a large advance to write a textbook. With the money in hand, he prefers spending his time sailing rather than sitting in his office working on the book.
b. David is trying to get a large advance to write a textbook. He knows, but publishers don’t, that he did poorly on the writing portion of his entrance exam for graduate school.
c. Brenda is buying a life insurance policy. She knows that members of her family tend to die young.
d. Maria, who has a large life insurance policy, spends her vacation pursuing her favourite hobbies: skydiving, bungee jumping, and bull-fighting.