An insurance company that faces a moral hazard problem will find that raising the rates it charges its customers is the best way to deal with this problem.

Question

Quizplus · Accepted Answer

Raising rates can exacerbate moral hazard by making policyholders feel more entitled to claim, instead, better risk assessment, deductibles, co-payments, and policy exclusions are often used to mitigate moral hazard.

An Insurance Company That Faces a Moral Hazard Problem Will