Rick goes to work 8 hours per day, but while he is at work he spends most of his time visiting internet sites monitoring his fantasy football teams. This is an example of
A)the Condorcet Paradox.
B)signaling.
C)moral hazard.
D)screening.

Question

Quizplus · Accepted Answer

Rick's behavior is an example of moral hazard, which refers to situations where an individual, who is protected by some form of insurance or safety net, behaves in a riskier way because the negative consequences and costs are borne by someone else. In this case, Rick's employer is paying for his time at work, but he is using that time to engage in personal activities instead of doing productive work. This behavior may be because he feels protected by his employment and is not concerned with the negative consequences that might arise from his actions.

Rick Goes to Work 8 Hours Per Day, but While