Moral hazard occurs when individuals:
A) do not do what is in their own best interest.
B) know more about acceptable business behaviour than other people do.
C) have an incentive to violate their morals.
D) know more about their actions than other people do.

Question

Quizplus · Accepted Answer

Moral hazard occurs when individuals have information about their own actions or behavior that others do not have, creating an incentive for them to act in their own self-interest rather than in the best interest of others. This can lead to the misuse of resources or the taking of unnecessary risks because individuals know they will not bear the full consequences of their actions.

Moral Hazard Occurs When Individuals