The tendency of those who are insured to take more risks is a problem of:
A)free riding.
B)moral hazard.
C)adverse selection.
D)negative externalities.
E)common resources.

Question

Quizplus · Accepted Answer

Moral hazard refers to the tendency of insured individuals to take more risks because they are protected by insurance. As they are protected from the financial consequences of their actions, they may be more willing to engage in risky behavior. This can lead to higher costs for insurers and can also result in negative externalities for society as a whole. Therefore, the tendency of insured individuals to take more risks is a problem of moral hazard.

The Tendency of Those Who Are Insured to Take More