An example of moral hazard is
A)workers working diligently even though the boss is not looking
B)health care insured employees forgoing their diet and exercise
C)drivers of safer cars turning their phones off before driving
D)borrowers investing their loan proceeds exactly as the bank requires

Question

​An example of moral hazard is
A)​workers working diligently even though the boss is not looking
B)health care insured employees forgoing their diet and exercise
C)drivers of safer cars turning their phones off before driving
D)​borrowers investing their loan proceeds exactly as the bank requires

Quizplus · Accepted Answer

Moral hazard refers to the possibility that individuals or institutions may take on more risk when they are insured against losses, as they are less likely to bear the full consequences of their actions. In this case, employees who have health care insurance may be less likely to take care of their health (through diet and exercise) since they know that their health care costs will be covered regardless of their behavior. This can lead to higher health care costs for both the employee and the insurer. The other choices do not necessarily demonstrate moral hazard.

​An Example of Moral Hazard Is

An Example of Moral Hazard Is