The actions you take because your actions are not fully observable and you are partially insulated from their consequences are referred to as
A)a hidden risk.
B)moral hazard.
C)adverse selection.
D)a bounded risk.

Question

Quizplus · Accepted Answer

This scenario describes moral hazard, which occurs when one party takes more risks because they are not fully responsible for the consequences of their actions. For example, if someone has insurance for their car, they may be more likely to drive recklessly because they know they will not bear the full cost of any accidents.

The Actions You Take Because Your Actions Are Not Fully