(Solved):Liz starts driving rashly after buying insurance. This is an example of a what? View Answer…

 

Question

Liz starts driving rashly after buying insurance. This is an example of a what?

 

EXPERT ANSWER

If Liz starts driving less carefully after the buys either health or auto insurance, it is an example of a moral hazard. Moral hazard means a situation in which someone is likely to take more risk when they know that someone else will pay part or all of the cost of the risky behavior. Other examples

Scroll to top