Which of the following is an example of moral hazard?
A) The healthiest people buy life insurance.
B) The sickest people buy health insurance.
C) The person with health insurance rides a motorcycle without wearing a helmet.
D) The person with life insurance exercises daily and eats healthy foods.

Question

Quizplus · Accepted Answer

Moral hazard refers to the phenomenon where people with insurance may engage in riskier behavior because they are protected from the full consequences of their actions. The person with health insurance riding a motorcycle without wearing a helmet is an example of this because they are more likely to take risks since they know they are covered by insurance if they get hurt.

Which of the Following Is an Example of Moral Hazard