What is moral hazard?
A)The tendency for people to engage in behavior that is considered highly desirable by the person who bears the cost of the behavior.
B)A situation in which buyers and sellers have different information about the quality of a good or the riskiness of a situation.
C)An agreement made between buyers and sellers who have the same information about the quality of a good or the riskiness of a situation.
D)The tendency for people to behave in a riskier way or put forth less effort when they do not face the full consequences of their actions.

Question

Quizplus · Accepted Answer

Moral hazard occurs when individuals take greater risks or exert less effort because they do not bear the full consequences of their actions, often due to some form of insurance or safety net that protects them from those consequences.

What Is Moral Hazard