True or False: Moral hazard is associated with healthy behavior by the insured individual.

Moral hazard refers to the situation where individuals who are insured may engage in riskier behavior than they otherwise would if they were not insured. This occurs because the financial consequences of that behavior (like medical costs from unhealthy activities) are partially borne by the insurer rather than the individual. Thus, instead of encouraging healthy behavior, moral hazard is generally connected to a decrease in the insured individual's motivation to act prudently regarding their health.

For example, someone with comprehensive health insurance might not prioritize regular exercise or proper diet, as they might feel covered for any resulting health issues. Therefore, the statement claiming that moral hazard is associated with healthy behavior is false, as moral hazard typically arises when insurance can lead to reduced caution about health-related behaviors.