Suppose you are covered under health insurance or belong to a Health Maintenance Organization (HMO),and you are insured against all or most of the costs of visits to the doctor. As a result you are likely to make greater use of medical services of all kinds.This tendency of people with insurance to change their behavior in a way that leads to more claims against the insurance company is called
A)Condorcet paradox.
B)moral hazard.
C)screening
D)signaling.

Question

Quizplus · Accepted Answer

The tendency of people with insurance to change their behavior and make greater use of medical services of all kinds is known as moral hazard. This is because the insurance policy reduces the financial risk for the person, leading them to take actions that they would not have taken if they were not insured. This behavior can result in more claims against the insurance company, leading to higher premiums for everyone in the insurance plan.

Suppose You Are Covered Under Health Insurance or Belong to a Health