Jane started eating more junk food and taking less care of her health after she bought a life insurance plan.Her behavior is an example of ________.
A) moral hazard
B) adverse selection
C) the paradox of thrift
D) the free-rider problem

Question

Quizplus · Accepted Answer

Moral hazard refers to the increased risk-taking behavior by individuals or firms after obtaining insurance, knowing that the consequences of their actions will be borne by the insurer. In this scenario, Jane is taking less care of her health because she knows that the life insurance policy will cover the financial loss in case of any health issues or accidents.

Jane Started Eating More Junk Food and Taking Less Care