What Is Moral Hazard

question 54

Multiple Choice

What is moral hazard?

• A)It refers to the private, self-interested actions that people pursue, which when taken collectively leads to a loss in economic surplus.
• B)It refers to the actions people take after they have entered into a transaction that makes the other party to the transaction worse off.
• C)It refers to the situation in which one party to a transaction takes advantage of knowing more than the other party to the transaction.
• D)It refers to the actions people take before they enter into a transaction so as to mislead the other party to the transaction.

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Definitions:

Ego

In psychoanalytic theory, the part of the personality that mediates between the demands of the id, superego, and reality.

Superego

Part of Freud's psychoanalytic theory, representing the moral component of the mind, comprising the conscience and ideal self.

Personality

A unique set of emotional, thought, and behavioral patterns that define an individual's way of interacting with the world and remain relatively consistent over time.

Age Five

This term refers to children who are five years old, a developmental stage characterized by significant growth in language, motor, and social skills.