The Problem of Moral Hazard Arises Because

question 44

Multiple Choice

The problem of moral hazard arises because

• A)life is full of all sorts of risks.
• B)after people buy insurance,they have less incentive to be careful about their risky behavior.
• C)a high-risk person is more likely to apply for insurance than is a low-risk person.
• D)insurance companies go to great effort to avoid paying claims to their policy holders.

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Definitions:

Group Polarization

The tendency of groups to make more extreme decisions than what their members first considered.

University Degree

A qualification awarded to students by a college or university after the successful completion of a course of study.

Professors

Senior teachers at colleges or universities who are experts in their field, responsible for lecturing, researching, and guiding students in their academic pursuits.

Social Loafing

The occurrence where people put in less effort while working as part of a group than they do when working independently.