The potential for a seller to alter behavior in an undesirable way following an economic transaction is called:

Question

Quizplus · Accepted Answer

Moral hazard refers to the risk that a seller may engage in undesirable behavior after the transaction is completed, such as taking risks or not fulfilling contractual obligations, knowing that the buyer bears the consequences. This risk arises due to asymmetric information and can be mitigated through contracts, monitoring, and incentives. The other options do not capture this particular issue in economic transactions.

The Potential for a Seller to Alter Behavior in an Undesirable