Which of the following is identified as a moral hazard?

A moral hazard refers to a situation where a person engages in risky behavior because they believe that they are protected from the consequences of that behavior, often due to insurance coverage. In the context of this question, lighting a candle near flammable materials exemplifies moral hazard since the individual may not adequately consider the potential consequences (such as a fire) because they might rely on insurance to cover any damages that occur. This behavior reflects a disregard for safety and a willingness to take risks that could lead to significant loss, under the assumption that they are shielded from the repercussions.

In contrast, leaving a garden hose on in the rain is primarily an example of negligence rather than a moral hazard, as this act does not stem from an expectation of insurance protection. A steep and narrow road presents inherent dangers and does not represent a decision influenced by insurance. Distracted driving, while undeniably risky, is characterized by behavioral recklessness rather than an understanding that insurance will alleviate the consequences. Therefore, among the choices given, the act of lighting a candle near flammable materials most clearly embodies the concept of moral hazard.