Recall the Application about how having car insurance affects driving behavior to answer the following
question(s).
-Recall the Application. The idea that an insured driver, who bears less than the full cost of a collision, will drive less carefully than an uninsured driver is an example of
A) asymmetric information.
B) adverse selection.
C) moral hazard.
D) a thin market.

Question

Quizplus · Accepted Answer

The idea that an insured driver may take more risks or drive less carefully because they know they are not fully responsible for the cost of a collision is an example of moral hazard. Asymmetric information refers to one party having more information than the other, adverse selection refers to the tendency for people with higher risk to obtain insurance, and a thin market refers to a market with few buyers and sellers.

Recall the Application About How Having Car Insurance Affects Driving