Using Contracts to Reduce Moral Hazard: This section considers the use of various types of contractual arrangements to reduce or eliminate the problem of moral hazard.  The example of Paul and Amy carries over from the previous section and a careful treatment of the specifics of this example is highly recommended.  It is worthwhile to note that constructing just the right contract to accomplish this task is likely to be very difficult and could involve costs that partially (or even completely) negate the benefits.  Unlike the attempts to reduce adverse selection by reducing or eliminating the asymmetry in information, contract design is more about managing and controlling the effects of the asymmetry.