James has invested in a health insurance plan that pays for half of his medical expenses.He is not very price-sensitive and does not hesitate to opt for expensive medial treatments.This is an example of the _____ effect.

Question

Quizplus · Accepted Answer

This is an example of the shared-cost effect, where the individual is less price-sensitive as the cost of the medical treatment is partially covered by the insurance plan. The individual is less concerned about the total cost and more likely to opt for expensive treatments.

James Has Invested in a Health Insurance Plan That Pays