Definition of moral hazard in English:

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moral hazard

Pronunciation: /ˈmôrəl ˈhazərd/


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.
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