In a television advertisement for AFLAC supplemental health insurance, an ice skater says to his skating partner, "Do you want to try a triple jump?" She responds, "Why not, I have AFLAC." This response illustrates the

A) principal-agent problem.
B) adverse selection problem.
C) moral hazard problem.
D) free-rider problem.

Moral Hazard

A situation in which one party engages in risky behavior or lacks incentive to guard against risk because they are protected by an insurance or other agreement.

AFLAC

An American insurance company that provides supplemental insurance to help cover expenses health insurance doesn't.

Triple Jump

An athletic event where the competitor makes a hop, a step, and then a jump in sequence.