If Ben becomes less likely to buy smoke detectors after he has fire insurance, he is illustrating
A) moral hazard.
B) adverse selection.
C) the lemon problem.
D) the free rider problem.

Question

Quizplus · Accepted Answer

Moral hazard occurs when an individual takes on more risk because they do not bear the full consequences of that risk, such as becoming less cautious after obtaining insurance.

If Ben Becomes Less Likely to Buy Smoke Detectors After