(Solved):A(n) _____ problem occurs when a person or institution does not have to bear the full consequences of its behavior and therefore assumes more risk than it otherwise would. View Answer…

 

Question

A(n) _____ problem occurs when a person or institution does not have to bear the full consequences of its behavior and therefore assumes more risk than it otherwise would.

a. asymmetric information

b. moral hazard

c. risk adjustment

d. specific hazard

 

EXPERT ANSWER

The correct answer is b. moral hazard.

Moral hazard is a concept used in economics to define a situation in which an entity increases its risk exposure because it is not fully responsible for

Scroll to top