The tendency for people to behave in a riskier way or to renege on contracts when they do not face the full consequences of their actions is called:
A)moral hazard.
B)adverse selection.
C)counter information.
D)collective bargaining.

Question

Quizplus · Accepted Answer

Moral hazard occurs when one party in a transaction takes risks because they do not bear the full consequences of their actions, often due to asymmetry of information or because another party is responsible for the consequences.

The Tendency for People to Behave in a Riskier Way