Moral hazard is a problem that arises when:
A)people are required to bear the negative consequences of their actions.
B)people don't have to bear the negative consequences of their actions.
C)people benefit from the negative actions of others.
D)government discourages companies from taking risks.

Question

Quizplus · Accepted Answer

Moral hazard occurs when individuals or entities do not have to face the negative consequences of their actions, leading them to act less cautiously than they otherwise would. This can lead to riskier behavior because the individual or entity does not bear the full cost of that behavior.

Moral Hazard Is a Problem That Arises When