An example of moral hazard is
A)workers working diligently even though the boss is not looking
B)health care insured dieting and exercising
C)drivers of safer cars turning their phones off before driving
D)borrowers investing their loan proceeds differently than the bank requires

Question

An example of moral hazard is​
A)​workers working diligently even though the boss is not looking
B)health care insured dieting and exercising
C)drivers of safer cars turning their phones off before driving
D)​borrowers investing their loan proceeds differently than the bank requires

Quizplus · Accepted Answer

Moral hazard occurs when one party takes risks that are not in the best interest of the other party because they do not bear the full consequences of their actions. In this case, borrowers who invest their loan proceeds differently than the bank requires are taking a risk that may lead to losses for the bank. The borrower may take risks that they would not take if they were investing their own money because they do not bear the full consequences of their actions. This is an example of moral hazard.

An Example of Moral Hazard Is​

An Example of Moral Hazard Is