When a Night Watchman Only Performs Two Walk-Throughs Per Night

question 7

Multiple Choice

When a night watchman only performs two walk-throughs per night when he is being paid to perform five walk-throughs per night, it is an example of

• A)both moral hazard and adverse selection.
• B)neither moral hazard nor adverse selection.
• C)moral hazard, but not adverse selection.
• D)adverse selection, but not moral hazard.

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Definitions:

Decision Criteria

The standards or benchmarks used to evaluate options and make choices in decision-making processes.

Fear-Of-Success Theory

A psychological theory suggesting that some individuals may have a fear or anxiety towards achieving success due to potential negative consequences or responsibilities it may bring.

TOTE Approach

A model in cognitive psychology representing the sequence of operations in problem solving: Test, Operate, Test, Exit.

Operate Phase

A stage or process in which systems, procedures, or principles are applied or enacted.