The problem that arises when people don't have to bear the negative consequence of their actions is known as:
A) adverse selection.
B) externality.
C) moral hazard.
D) signaling.

Question

Quizplus · Accepted Answer

Moral hazard occurs when individuals or entities take risks because they do not have to bear the full consequences of their actions, often due to being insulated from risk.

The Problem That Arises When People Don't Have to Bear