John started going to soccer matches after moving in with a roommate who is a huge fan of soccer.This is an example of ________.

Question

Quizplus · Accepted Answer

A peer effect is when an individual's behavior is influenced by their peers or the people around them. In this case, John started going to soccer matches after living with a roommate who is a fan of soccer, which suggests that his behavior was influenced by his roommate's interest in soccer. This is an example of a peer effect. Moral hazard refers to the behavior of individuals or institutions that are more willing to take risks when they are insured against losses, adverse selection is the tendency for only high-risk individuals to seek insurance, and a pecuniary externality is a spillover effect from an economic transaction that only affects prices. None of these concepts apply to this scenario.

John Started Going to Soccer Matches After Moving in with a Roommate