Dottie Has the Illusory Belief That There Is a Correlation

question 12

Multiple Choice

Dottie has the illusory belief that there is a correlation between washing her car and the occurrence of rain in her area.According to research,Dottie is now much more likely to notice when

• A)it rains and she has not washed her car.
• B)it rains and she has just washed her car.
• C)it does not rain and she has just washed her car.
• D)it does not rain and she has not washed her car.

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Definitions:

Moral Hazard

A situation in which one party is more likely to take risks because they do not bear the full consequences of their actions, often due to information asymmetry.

Deductible

The amount paid out of pocket by the policyholder before an insurance company pays a claim.

Insurance Coverage

The amount and types of risk or liability that are covered for an individual or entity by insurance services, against losses.

Flood Insurance

A specific type of insurance policy that covers property damage due to flooding, often required for buildings in flood-prone areas.