One Way of Reducing the Moral Hazard Problem in the Automobile

question 11

Multiple Choice

One way of reducing the moral hazard problem in the automobile insurance market is for drivers to

• A) carry high deductibles.
• B) carry no deductibles.
• C) all have good driving records.
• D) never make any claims.

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Definitions:

Judgment

The ability to make considered decisions or come to sensible conclusions.

Solution Finding

The process of identifying and implementing ways to solve a problem or address a specific challenge.

Implement

A process of putting a decision or plan into effect.

Fact-finding Phase

The initial stage in a process or investigation aiming to gather all relevant information and data about a subject or issue.