A(n)_________ Problem Occurs When a Person or Institution Does Not

question 21

Multiple Choice

A(n) _________ problem occurs when a person or institution does not have to bear the full consequences of its behavior and therefore assumes more risk than it otherwise would.

• A)asymmetric information
• B)moral hazard
• C)risk adjustment
• D)specific hazard

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Definitions:

Groupthink

A psychological phenomenon that occurs within a group of people in which the desire for harmony or conformity results in an irrational or dysfunctional decision-making outcome.

Door-In-The-Face

A persuasion technique involving making a large, unreasonable request that is likely to be refused in order to increase the likelihood of agreement to a smaller request later.

Lowballing

A persuasive technique often used in sales where an initially lower price is offered to get agreement from the buyer, only for it to be raised before the sale is concluded, often for reasons made to seem unavoidable.

Informational Influence

A form of social influence that occurs when an individual turns to the members of a group to obtain and accept information about reality.