Asked by Arshdeep Singh on Sep 24, 2024
Verified
An example of moral hazard is
A) people drive as carefully in icy conditions with antilock brakes as without
B) people drive as safely with more airbags as without
C) football players avoid 'spearing' with their heads even with safer helmets
D) people fail to read the medicine warnings more often when self-medicating versus with a doctor's prescription
Moral Hazard
A situation where one party takes on excessive risk because the negative consequences of the risk will be borne by another party.
Antilock Brakes
A safety system in vehicles that prevents the wheels from locking up and skidding during braking, improving control.
Self-medicating
The practice of using drugs, alcohol, or other substances to treat one's ailments without professional guidance, which can lead to misuse and health problems.
- Understand comprehensively the notion of moral hazard in insurance and employment contexts.
Verified Answer
GK
Grishma Kompalli034 days ago
Final Answer :
D
Explanation :
Moral hazard refers to the increase in risky behavior by an individual or institution when they are insured or protected against losses. In this case, people may fail to read medicine warnings more often when self-medicating because they feel protected by the fact that they can easily obtain the medicine without a prescription, even though it may be risky or harmful to do so.
Learning Objectives
- Understand comprehensively the notion of moral hazard in insurance and employment contexts.