Ratings systems can be manipulated and therefore do not always eliminate moral hazard.

Question

Quizplus · Accepted Answer

Ratings systems can be manipulated through various means, such as falsifying information, bribery, or collusion. This manipulation can result in false ratings, which do not accurately reflect the risks or quality of the rated entity, and can lead to moral hazard. Therefore, ratings systems do not always eliminate moral hazard.

Ratings Systems Can Be Manipulated and Therefore Do Not Always