Moral hazard occurs ________ an agreement is made and when monitoring the parties to the agreement is ________.
A) before; easy
B) before; costly
C) after; easy
D) after; costly

Question

Quizplus · Accepted Answer

Moral hazard occurs after an agreement is made and when monitoring the parties to the agreement is costly, as it involves the risk that one party may change their behavior to the detriment of the other party because they do not bear the full consequences of their actions.

Moral Hazard Occurs ________ an Agreement Is Made and When