Which is NOT an example of moral hazardA) people eat less at all-you-can-eat buffetsB) loggers clear-cut a tract of land when paying a fixed price rather than when paying per tree felledC) Drivers of heavier,safer cares are more likely to run stop signsD) workers on commission work harder than those paid an hourly wage

Question

​Which is NOT an example of moral hazardA) ​people eat less at all-you-can-eat buffetsB) loggers clear-cut a tract of land when paying a fixed price rather than when paying per tree felledC) Drivers of heavier,safer cares are more likely to run stop signsD) ​workers on commission work harder than those paid an hourly wage

Fischer Proffitt · Accepted Answer

Final Answer : A, Explanation :  Moral hazard refers to the tendency of people or organizations to take greater risks when they are insulated from the consequences of their actions. Eating less at an all-you-can-eat buffet does not involve any greater risk-taking or insulation from consequences, and is therefore not an example of moral hazard. Choices B, C, and D are all examples of moral hazard, as they involve greater risk-taking or insulation from consequences due to the structure of the incentives involved.

Definitions

Learning Objectives

Learning Objectives

Related questions