Question: 1. Discuss the potential explanations for this finding: why are outpatient care expenditures more responsive to co-insurance rate than inpatient care expenditures? In other words,

1. Discuss the potential explanations for this finding: why are outpatient care expenditures more responsive to co-insurance rate than inpatient care expenditures? In other words, why is insurance moral hazard more severe among outpatient care, compared with inpatient care? (Hint: think about the role of physicians during inpatient vs. outpatient care

2. Why do you think an experiment was needed to learn about demand elasticities? Why couldn't we just use what we observe in real-world situations to infer demand elasticities? For example, if we observe people enrolled in "gold plans" (more generous in terms of coverage) spend more than people enrolled in "silver plans" (less generous in terms of coverage), why can't we use the difference in their expenditures as evidence of insurance moral hazard and infer demand elasticities?

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