Robert changed jobs and relocated to a new city.He initially decided to rent a small apartment close to his place of work.However,he decided to live in a much bigger and costlier apartment when he found that his employer would pay him a house rent allowance.This is an example of ________.

Question

Quizplus · Accepted Answer

This is an example of moral hazard, as Robert's behavior changed after he learned that his employer would pay for his increased housing costs. He took on more risk by living in a more expensive apartment, knowing that it wouldn't impact his own finances.

Robert Changed Jobs and Relocated to a New City