Moral hazard is:
A) when individuals make exchanges in the grey market.
B) the tendency for people to behave in a riskier way when they're insured.
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 a riskier way when they are insured or protected from certain risks. This is because they are less likely to suffer the negative consequences of their risky behavior, and instead, may even benefit from it through insurance payouts or other forms of protection.

Moral Hazard Is