An employee in a department store often steals goods when other employees are not around.Because the store does not have a surveillance camera,the store manager is unable to monitor his activities.This behavior is an example of ________.
A) adverse selection
B) moral hazard
C) the internalization of externalities
D) the paradox of thrift

Question

Quizplus · Accepted Answer

This scenario fits the definition of moral hazard, where an individual may take risks or engage in undesirable behavior because they believe they will not be caught or face negative consequences, due to limitations or lack of monitoring or oversight.

An Employee in a Department Store Often Steals Goods When