It mainly discusses the main function of deposit insurance system. deposit run theory. Moral hazard and adverse selection. reasonability and theory model of deposit insurance system.
We show that the existence of external control system would enhance the monitoring function of the internal control system, and as a result restrain the moral hazard behaviors of the entrepreneur.
On the basis of the two sides utility function a first best payment system has been provided to eliminate moral hazard and self-selection from hospital by game theory.