Moral hazard is a condition that exists when managers must make quick decisions that may go against their ethical principles.

Question

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Moral hazard is actually a condition that exists when one party takes risks because another party bears the costs or consequences of those risks. It is not directly related to managers making quick decisions that may go against ethical principles, although unethical behavior can be a result of moral hazard.

Moral Hazard Is a Condition That Exists When Managers Must