You own an ice cream store and are concerned that an employee may be giving generous scoops to friends and relatives and smaller scoops to some other customers. This is an example of
A)a moral hazard problem.
B)adverse selection.
C)behavioral economics.
D)signaling.

Question

Quizplus · Accepted Answer

The situation described is an example of a moral hazard problem, where the employee has the incentive to act in their own interest (by giving larger scoops to friends and family) rather than the interest of the store and its customers.

You Own an Ice Cream Store and Are Concerned That