An Insurance Company Is Likely to Attract Customers Like Clancy

question 323

Multiple Choice

An insurance company is likely to attract customers like Clancy who want to purchase insurance because he knows better that the company that he is more likely to make a claim on a policy. What is the term used to describe the situation above?

• A) moral hazard
• B) adverse selection
• C) asymmetric information
• D) economic irrationality

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Definitions:

Likelihood of Commitment

The probability or extent to which individuals are expected to be dedicated or loyal to a cause, decision, or organization.

Subordinates

Individuals who work under the authority of someone else in an organization, typically referring to employees who report directly to a manager or leader.

Vroom-Jago Leadership Model

A decision-making framework in leadership that helps leaders determine the appropriate level of involvement of team members in decision-making processes.

Vroom-Jago

A leadership model that focuses on decision-making and the role of situation in leader effectiveness, highlighting how different situations call for different leadership styles.