The cost-benefit principle leads you to _____ when you are insured.
A)become more risk-averse
B)respond less to incentives
C)take fewer precautions
D)remain consistent in behavior

Question

Quizplus · Accepted Answer

The cost-benefit principle, when applied to insurance, suggests that individuals may take fewer precautions because the financial risk of certain actions is transferred to the insurer. This phenomenon is known as moral hazard.

The Cost-Benefit Principle Leads You to _____ When You Are