Which Is an Example of Moral Hazard

question 35

Multiple Choice

Which is an example of moral hazard?

• A) A car dealership recommends that a customer replace barely used tires.
• B) A driver drives faster than the speed limit.
• C) An unhealthy person purchases health insurance.
• D) A driver purchases car insurance.

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Definitions:

Lurking Variables

Variables that are not included as explanatory or independent variables in the analysis but can affect the relationship between the variables studied.

Randomize

To arrange or assign subjects, treatments, or sequences in a random manner to reduce bias in experimental design.

Blinding

A research design technique where one or more parties in an experiment are unaware of the treatment assignments to prevent bias.

Experimental Unit

The smallest division of the experimental material such that any two units are independent and can be assigned to different treatments.