7th October 2019
Insurance as a regulatory tool
Just like reputation places a very significant regulatory function, insurance plays (or can play) a significant role in ensuring good behaviour.
Short overview: How Insurance Substitutes for Regulation – Omri Ben-Shahar and Kyle D. Logue
Fuller academic article: Outsourcing Regulation: How Insurance Reduces Moral Hazard – Omri Ben-Shahar, University of Chicago Law School and Kyle D. Logue, University of Michigan Law School [PDF]
I believe dynamic and information-rich insurance and reputational mechanisms can be far more effective than static mechanisms like occupational licensing.