________ refers to actions taken by one party in a transaction that are relevant for,but not observed by,the other party.
A) A negative externality
B) Moral hazard
C) A positive externality
D) Bargaining

Question

Quizplus · Accepted Answer

Moral hazard refers to the possibility that one party may take actions that increase their risk because they know the other party will pay for the negative consequences. This is relevant for the transaction but may not be observed by the other party.

________ Refers to Actions Taken by One Party in a Transaction