In moral hazard situations, individuals may intentionally:

In the context of risk and insurance, moral hazard refers to the situation where individuals may take on riskier behavior or act in a way that increases the likelihood of a loss because they are insulated from the consequences, typically due to insurance coverage.

When individuals intentionally cause a loss, they are exploiting this situation, believing that they can evade personal financial repercussions because their insurance will cover the damage or loss they inflict. This creates a problematic cycle whereby the presence of insurance can lead to less cautious behavior. Individuals engaging in such actions are demonstrating a clear understanding of how moral hazard operates, as they leverage the safety net provided by insurance to act in a manner that would not be acceptable or likely without that coverage.

On the other hand, the other choices imply behaviors that would mitigate risk or promote accuracy—such as taking preventive measures or reporting honestly—which contradict the dynamics of moral hazard. Individuals motivated by moral hazard are not likely to engage in risk-reduction strategies or act in good faith when they have the expectation of indemnification from losses caused by their actions. Therefore, the intentional act of causing a loss aligns perfectly with the definition of moral hazard, highlighting the risks that insurance can introduce when individuals act on this principle.