When people behave in ways that involve increased risk because they have insurance,this is known as

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Moral hazard refers to the tendency for people to take risks that they would not otherwise take because they are insured against the potential losses. This can lead to higher costs for insurance providers and a potential increase in premiums for everyone. Adverse selection refers to the tendency for people who are more likely to have losses to be more likely to purchase insurance, leading to a pool of insured individuals who are potentially more expensive to cover. Asymmetric information refers to a situation where one party in a transaction has more information than the other party, potentially leading to inefficient outcomes. A Health Maintenance Organization (HMO) is a type of healthcare organization that provides coverage to members in exchange for a set monthly fee.

When People Behave in Ways That Involve Increased Risk Because