Many people smoke and continue poor eating habits because they have health insurance.This example illustrates:
A)moral hazard.
B)signaling.
C)reputation.
D)adverse selection.

Question

Quizplus · Accepted Answer

This example illustrates moral hazard, which refers to the idea that individuals are more likely to engage in risky behavior when they are protected from the full consequences of their actions. In this case, individuals may continue to smoke and have poor eating habits because they know they have health insurance that will cover the costs of any resulting health problems. This creates a moral hazard for the insurance company, as they may end up paying more in healthcare costs than they would if their customers were more cautious and responsible with their health.

Many People Smoke and Continue Poor Eating Habits Because They