All of the Following Are True Regarding Moral Hazard Except

question 26

Multiple Choice

All of the following are true regarding moral hazard except which one?

• A)Situations of moral hazard tend to be rare occurrences.
• B)It arises when parties to a transaction have conflicting objectives and the supervising parties cannot monitor the other parties.
• C)It is a situation in which individuals make hidden actions that benefit them at the expense of the other parties.
• D)It typically occurs after participants have already entered into a contract or agreement.

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Definitions:

Noise

Extraneous factors that can work against effective communication by distorting a message or the feedback received during the communication process.

Fields of Experience

The various domains or sectors in which an individual or organization has gained knowledge or expertise.

Experimental Method

A research technique that establishes the causal relationship between an independent variable (x) and dependent variable (y) by randomly assigning participants to experimental groups characterized by differing levels of x, and measuring the average behavior (y) that results in each group.

Causality

The relationship between cause and effect, where one event (the cause) directly influences another (the effect).