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When Joe didn't have health insurance, he acted very cautiously, because he knew he would have to pay for any medical bills he incurred. Now that he has health insurance, he engages in more risky activities, such as skydiving and snowboarding, because he knows that if he gets hurt, his health insurance will cover it. The economic problem in this story is known as:

User Drclaw
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Answer: moral hazard

Step-by-step explanation:

A moral hazard happens when one party in a contract has the chance to take new risks that could harm the other party. It usually happens in the financial industry, and the insurance industry. For example, once people acquire insurance, they lose the urge to be cautious about risky practices because insurance is responsible for covering most of the possible losses.

User Noam Solovechick
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