Example of adverse selection or moral hazard

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Describe whether each of the following is an example of adverse selection or moral hazard, and why.

a. When I drive a rental car, I drive much more recklessly than when I drive my own car.

b. The sickest people are the ones most likely to sign up for health insurance.

c. Weasel Wannabe took out a business loan from Firstbank to start a hot dog stand, but instead spent the money on a trip to Aruba.

d. Neighborhoods with high levels of student housing and low levels of owner-occupied housing tend to deteriorate more quickly than other neighborhoods.

e. The safest borrowers are unlikely to need bank loans.

Reference no: EM13995316

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