Moral hazard occurs when someone changes their behaviour because they are insulated from risk.

Question

Quizplus · Accepted Answer

Moral hazard refers to the tendency of a person or entity to take greater risks or behave differently than they would have if they were fully responsible for the outcome of their actions. This occurs when there is a lack of consequences for one's actions, typically due to some form of insurance or protection from loss. Thus, the correct statement is that moral hazard does occur when someone changes their behavior because they are insulated from risk.

Moral Hazard Occurs When Someone Changes Their Behaviour Because They