If large numbers of people purchase flood insurance after a widely reported flood in Sydney, this may be a case:
A)where people interpret evidence to confirm their pre-existing beliefs
B)of moral hazard
C)where people give weight to a small number of vivid observations
D)where people overestimate their ability

Question

Quizplus · Accepted Answer

People may be influenced by the recent vivid event of the flood, leading them to overestimate the likelihood of future floods and thus purchase insurance.

If Large Numbers of People Purchase Flood Insurance After a Widely