Definitions
There is 1 meaning of the phrase
Moral Hazard.
Moral Hazard - as a noun
(economics) the lack of any incentive to guard against a risk when you are protected against it (as by insurance)
Example: "Insurance companies are exposed to a moral hazard if the insured party is not honest"
Example Sentences
"Banks face a moral hazard when they believe they will be bailed out by the government if they make risky investments."
"The insurance industry debates how to mitigate moral hazard in order to prevent fraudulent claims."
"Government guarantees on certain loans can create a moral hazard by encouraging risky behavior."
"The moral hazard of having a safety net is that it may lead to imprudent decisions."
"Financial institutions that are deemed too big to fail can create moral hazard in the market."
