Asked by Shelby Klemmer on Sep 24, 2024
Individuals with homeowner's insurance tend to be more forgetful about locking their possessions safely before heading out.This is an example of
A) Adverse selection
B) Moral hazard
C) Screening
D) None of the above
Moral Hazard
The risk that one party to a transaction has incentives to take undue risks because the costs incurred will not be fully borne by that party.
Homeowner's Insurance
An insurance policy that provides financial protection against disasters, theft, and accidents that may occur in one's home or on their property.
Locking Possessions
The act of securing personal or valuable items to prevent unauthorized access or theft.
- Familiarize oneself with the concept of moral hazard in the contexts of employment and insurance.
Learning Objectives
- Familiarize oneself with the concept of moral hazard in the contexts of employment and insurance.