Question

Curt borrowed money from a bank to purchase a fishing boat. He purchased property insurance on the boat. Curt had difficulty making loan payments because he did not catch many fish, and fish prices were low. Curt intentionally sunk the boat, collected from his insurer, and paid off the loan balance. This scenario illustrates the problem of

Answer 1

Answer: Moral hazard

Step-by-step explanation:

Moral hazard is the tendency for people to behave in riskier ways knowing that someone else bears the cost of those risks.