Insured Driver's Risky Behavior
After purchasing comprehensive car insurance, a driver begins to drive more recklessly, such as speeding or not paying attention, because they know the insurance will cover the costs of any potential accident. The change in behavior occurs after the insurance contract is signed. This is a problem of moral hazard, not adverse selection, as the information asymmetry arises from hidden actions post-contract, not hidden attributes pre-contract.
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Insured Driver's Risky Behavior