Final answer:
Joe's course of action is known as arson, a criminal act involving deliberate property fire setting, often linked with insurance fraud. Insurance companies reduce the risk of such acts through investigations and by urging businesses to install and maintain minimum security and fire sprinkler systems.
Step-by-step explanation:
Joe's restaurant business has been steadily losing money from the moment it started. When Joe decides to stage a fire in the kitchen after dismantling the fire-safety equipment to collect insurance money, this course of action is known as arson. Arson is a criminal act of deliberately setting fire to property. Joe's actions also involve insurance fraud since he intends to deceive the insurance company to receive money under false pretenses. Insurance companies combat extreme cases of moral hazard, like arson for fraudulent purposes, by conducting investigations and encouraging businesses to maintain a minimum level of security and have fire sprinkler systems installed and inspected regularly.