Which of the following is an example of moral hazard?
A) After Guiseppe buys fire insurance, he begins to smoke cigarettes in bed.
B) None of these answers demonstrate moral hazard.
C) Martin has been feeling poorly lately so he seeks health insurance.
D) Both of Suzanne's parents lost their teeth due to gum disease, so Suzanne buys dental insurance.
E) All of these answers demonstrate moral hazard.

Question

Quizplus · Accepted Answer

Moral hazard refers to the tendency of individuals to take on riskier behavior because they are protected against losses. In this scenario, Guiseppe is smoking in bed, which is a risky behavior, because he knows that he is insured against fire.

Which of the Following Is an Example of Moral Hazard