When you have to pay a deductible when you file a car accident claim, you are more likely to drive carefully. This is an example of reducing the ____ problem.

Question

Quizplus · Accepted Answer

Moral hazard refers to the tendency of individuals to take on more risk when they are not directly responsible for the costs of that risk. By requiring individuals to pay a deductible when filing a car accident claim, they are more directly responsible for the costs of their risky behavior, which incentivizes them to drive more carefully and reduce the likelihood of accidents.

When You Have to Pay a Deductible When You File