Moral hazard is due to
A)hidden characteristics.
B)hidden actions.
C)symmetric information.
D)adverse selection.

Question

Quizplus · Accepted Answer

Moral hazard is due to hidden actions, where one party changes their behavior to take advantage of the other party's inability to observe it, leading to increased risk-taking or irresponsible behavior. This is in contrast to adverse selection, which is caused by hidden characteristics and asymmetric information, where one party has better information than the other.

Moral Hazard Is Due to