Question

Which of the following refers to the​ principal-agent problem in the market for health​ care?

a. Doctors pursuing their own interests rather than the interests of their patients.b. Doctors pursuing only the interests of their patients rather than the interest of society.c. A conflict of interest between doctors and health insurance companies.d. Doctors pursuing the interests of health insurance providers rather than the interests of their patients.

Answer 1

a. Doctors pursuing their own interests rather than the interests of their patients

Step-by-step explanation:

A principal is an individual or a group that entrusts a certain responsibilities to someone else (known as the agent) in an entity . The agent therefore has superior information than the principal and therefore the former makes decisions on behalf of the latter. A conflict of interest can occur when the agent pursues his own interests for personal gains and ignores the responsibility he was hired to do hence creating Principal-Agent problem. Among these choices, doctors pursuing their own interests rather than the interests of their patients will lead to principal agent problem.