The problem that arises when one person performs a task on behalf of another person is called
A)the hidden characteristics problem.
B)the lemons problem.
C)moral hazard.
D)adverse selection.

Question

Quizplus · Accepted Answer

Moral hazard occurs when one party takes risks because another party bears the cost of those risks. In the context of someone performing a task on behalf of another, the person doing the task may not perform it with the same care or diligence they would if they were the direct beneficiary, leading to potential issues or losses for the person on whose behalf the task is being performed.

The Problem That Arises When One Person Performs a Task