Moral hazard is:
A)the tendency for people to behave in a riskier way when they're insured.
B)when individuals make exchanges in the grey market.
C)when one party acts in a way that is ethically outside the norm in a market exchange.
D)when both parties act in a way that is ethically outside the norm in a market exchange.

Question

Quizplus · Accepted Answer

Moral hazard refers to the tendency for people to behave in riskier ways when they are insured, knowing that they will not fully bear the consequences of their actions. This occurs because they are protected by insurance policies, which may make them less cautious and more likely to engage in risky behaviors.

Moral Hazard Is