An example of moral hazard is
A)workers shirking when the boss is not looking
B)health care insured dieting and exercising
C)drivers of safer cars turning their phones off before driving
D)borrowers investing their loan proceeds exactly as the bank requires

Question

Quizplus · Accepted Answer

Moral hazard refers to the behavior of individuals who take greater risks when they are insured against those risks. In this case, workers may shirk or be less productive when they know their boss is not monitoring their work, because they are not afraid of losing their job or facing disciplinary action. This behavior increases the risk for the employer and is an example of moral hazard. The other answer choices do not demonstrate moral hazard.

An Example of Moral Hazard Is