Because Don has health insurance, he is more likely to see the doctor when he has a cold. This is an example of
A) adverse selection.
B) moral hazard.
C) both moral hazard and adverse selection.
D) private information.

Question

Quizplus · Accepted Answer

Moral hazard occurs when an individual has an incentive to take more risks because they do not bear the full cost of those risks, such as visiting the doctor more frequently because insurance covers the cost.

Because Don Has Health Insurance, He Is More Likely to See