Which is NOT an example of moral hazard?
A) A hair dresser colors poorly a client's hair.
B) A cab driver takes a longer route to the destination to collect a higher fare.
C) A dentist recommends an unnecessary dental procedure.
D) A car salesman recommends a car that has been wrecked.

Question

Quizplus · Accepted Answer

Moral hazard refers to the behavior change of an individual or an entity that occurs due to the existence of insurance or protection against risk. A hairdresser, cab driver, dentist, and car salesman are not examples of moral hazard because they are not taking advantage of insurance or protection against risk. Rather, they are engaged in unethical practices, such as performing poorly, taking longer routes, recommending unnecessary procedures, or selling damaged goods.

Which Is NOT an Example of Moral Hazard