Drivers with auto insurance being more likely to act carelessly is an example of:
A) adverse selection.
B) moral hazard.
C) asymmetric selection.
D) information optimization.

Question

Quizplus · Accepted Answer

This scenario represents a moral hazard, which occurs when someone is more likely to take risks or behave irresponsibly because they are protected from the consequences of their actions (in this case, by having auto insurance).

Drivers with Auto Insurance Being More Likely to Act Carelessly