Carlos Has a Camera in His Car That Records Continuously

question 211

Essay

Carlos has a camera in his car that records continuously when the car is in motion. The insurance company gives his parents a discount for having the camera in his car. If the car makes a sudden motion, the recording is sent to an analyst at the insurance company, who determines if Carlos is engaging in risky behavior. The analyst gave Carlos a "D" grade for his driving. Carlos was shocked; he considers himself to be an above-average driver. His parents were not shocked. What aspect of behavioral economics might explain this situation?

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Definitions:

Human Capital

People’s skills, knowledge, experience, and general attributes.

Competitive Advantage

The edge that gives organizations a more beneficial position than their competitors and allows them to generate more profits and retain more customers.

Inimitability

The quality of being impossible to copy or imitate, often contributing to a competitive advantage.

Organizational Behavior

studies how individuals and groups interact within a company and how these interactions affect the organization's functioning.