________ occurs when actions taken by one party to a transaction are different from what the other party expected at the time of the transaction.

Question

Quizplus · Accepted Answer

Moral hazard occurs when one party to a transaction takes actions that are hidden from or not expected by the other party, often after the transaction has occurred. This can lead to suboptimal outcomes because the party taking the action does not bear the full consequences of their actions, leading to riskier behavior than would otherwise be the case.

________ Occurs When Actions Taken by One Party to a Transaction