Moral hazard can be reduced by:
A)the use of 100% insurance coverage.
B)imposing a deductible on insurance coverage.
C)taking away personal stakes for people with private information.
D)offering fewer incentives to people with private information to act in a less risky manner.

Question

Quizplus · Accepted Answer

Imposing a deductible on insurance coverage can reduce moral hazard as it requires the insured individual to bear a portion of the cost of any damage or loss, making them less likely to engage in risky behavior. This increases personal stakes and incentivizes individuals to act in a more responsible and careful manner. Option A increases moral hazard by eliminating personal cost to the insured, Option C and Option D don't directly address the issue of moral hazard.

Moral Hazard Can Be Reduced By