Moral hazard is said to exist when one party to a transaction

Name: Moral hazard is said to exist when one party to a transaction
Brand: Quizplus
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Question

Quizplus · Accepted Answer

Moral hazard occurs when one party has the incentive to shift costs or take risks because they know that the negative consequences will be borne by another party in the transaction. This can occur, for example, when someone purchases insurance and then engages in riskier behavior because they know the insurance company will bear the costs of any negative outcomes.

Moral Hazard Is Said to Exist When One Party to a Transaction