restricts the availability and application of deposit insurance in the United States.
Other economists argue that, in an economy characterized by moral hazard and multiple commodities, competitive equilibrium is not constrained efficient (Arnott and Stiglitz, 1986, pp. 1 24). These economists argue that such inefficiencies may be adequately corrected through (1) the taxation of harmful factors and/or behaviors, and (2) the subsidization of beneficial factors and/or behaviors. Where economists such as Cyrnak (1986, pp. 1 3) use moral hazard as an argument for the assumption of greater risk levels by entities, economists such as Arnott and Stiglitz (1986, pp. 1 24) use moral hazard as an argument for greater governmental intervention in an economy.
While the approach of Arnott and Stiglitz (1986, pp. 1 24) may be used to illustrate the ways in which diverse factors and individual behaviors may affect societal welfare and individual welfare in quite different magnitudes, the approach also implies that such a model may be used by regressiv
...