moral hazards
Insurance encourages recklessness
Moral hazards are situations where someone takes greater risks because they won't bear the full consequences.
The term comes from insurance—a person with fire insurance might be less careful about fire prevention.
It extends to any arrangement where one party's protection encourages reckless behavior: The bailout created a moral hazard for banks.
Singular: moral hazard.
- incentiveReward encouraging action
- ethicsStudy of right conduct
- asymmetryAbsence of balanced form
- economicsScience of resource allocation
- dilemmaForced choice between undesirables
risk · playing with house money · insurance claims · insurance fraud · indemnification · behaviour · risk management · fiduciary duties · culpability · misconduct · coverage limits · mutual aid societies · minimization · ethical quandaries · market failure · contractual obligations · golden parachute · too big to fail
moral hazardsskin in the game
Personal risk in outcome
personal liability · co-investment · risk sharing · self-insurance · natural consequences
moral hazardsaccountability
Obligation for one's actions
personal responsibility · fiduciary duty · stewardship · deductibles · copayments
moral hazardsintrinsic motivation
Desire from within oneself
ethical conduct · self-regulation · professional ethics · integrity · prudence
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