Evaluating Solutions to Contract Incompleteness
An auto insurance company observes that its policyholders with theft protection are reporting stolen vehicles at a higher rate than anticipated. The company suspects this is because insured drivers are becoming less careful about locking their cars and parking in safe locations—behaviors the company cannot monitor. Propose two distinct strategies the insurance company could implement to mitigate the financial impact of these hidden actions. For each strategy, evaluate its potential effectiveness and discuss one potential drawback or limitation.
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