Individuals with homeowner's insurance tend to be more forgetful about locking their possessions safely before heading out.This is an example of

Question

​Individuals with homeowner's insurance tend to be more forgetful about locking their possessions safely before heading out.This is an example of

Quizplus · Accepted Answer

Moral hazard is the tendency of an individual to take risks or act irresponsibly because of the protection or insurance they have. In this case, homeowners may become forgetful about locking their possessions because they know they are protected by their insurance policy, therefore showing a moral hazard. Adverse selection refers to the tendency of individuals with higher risk to obtain insurance more often than those with lower risk. Screening is the process used by insurers to identify and assess the risks involved in providing insurance coverage to an individual or organization. Neither adverse selection nor screening accurately describe the situation described in the question.

​Individuals with Homeowner's Insurance Tend to Be More Forgetful About

Individuals with Homeowner's Insurance Tend to Be More Forgetful About