Which scenario exemplifies a morale hazard?

Morale hazard refers to the increased risk of loss resulting from an insured's careless behavior, often stemming from a sense of indifference or a lack of concern for the consequences, typically because they are covered by insurance.

In this scenario, the correct example of a morale hazard is presented when a new insurance buyer drives recklessly. This individual may feel a sense of security from having purchased insurance, leading them to engage in riskier driving behaviors, believing they will not face the financial consequences of an accident. The recklessness is rooted in their attitude towards being insured, exemplifying morale hazard effectively.

Other options depict different concepts: a person driving without insurance is demonstrating a perilous or negligent situation rather than a morale hazard; a careful driver with a high deductible shows a responsible attitude toward risk management; and a seasoned driver who avoids risky situations is, by contrast, demonstrating safe behavior, not a morale hazard. Thus, the reckless behavior of the new insurance buyer perfectly captures the essence of morale hazard.