Definition of moral hazard in English:

Share this entry

moral hazard

noun

[mass noun] Economics
Lack of incentive to guard against risk where one is protected from its consequences, e.g. by insurance.
Example sentences
  • He is creating moral hazard by making investors think that investment risks are minimized simply by skimming an independent stock research report.
  • The recent history of the credit system can be thought of as the evolution of increasingly successful methods of reducing the risk premium caused by hidden information and moral hazard.
  • For example, if moral hazard is associated with deposit insurance, the greater risks banks take may demand stronger preventive techniques.

For editors and proofreaders

Line breaks: moral haz¦ard

Share this entry
 

What do you find interesting about this word or phrase?

Comments that don't adhere to our Community Guidelines may be moderated or removed.