With moral hazard,fair insurance contracts are not viable because
A)individuals' aversion to risk is reduced.
B)insurance company's administrative costs are increased.
C)individuals fear unscrupulous agents.
D)probabilities of loss are increased over what is expected.

Question

Quizplus · Accepted Answer

Moral hazard occurs when individuals change their behavior because they are insured, leading to an increased probability of loss, making fair insurance contracts unviable.

With Moral Hazard,fair Insurance Contracts Are Not Viable Because