Moral hazard refers to any action of external partners such as suppliers, buyers, and join venture partners.

Question

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Moral hazard refers to the risk that a party to a transaction may act in a way that benefits them while imposing the costs on the other party. It typically refers to the behavior of the party who has more information or control over the outcome of a transaction, such as an insurance company or bank, rather than external partners like suppliers, buyers, or joint venture partners.

Moral Hazard Refers to Any Action of External Partners Such