moral hazard

moral hazard (usually uncountable, plural moral hazards)

1. (economics, insurance) The prospect that a party insulated from risk may behave differently from the way it would behave if it were fully exposed to the risk.
   • 2008 October 4, William Keegan, “Moral hazard? It's just another danger along the capitalist way”, in The Guardian‎, →ISSN:

     And what about moral hazard—or concern that protecting the system, however errant the behaviour of certain bankers, will encourage more folly in the future?

   • 2009 December 18, Megan McArdle, “How Big a Problem is Moral Hazard?”, in The Atlantic‎:

     I go to a lot of pro-market think tank events where one speaker or another blames the financial crisis and the current recession on moral hazard, as well as basically everything else that has gone wrong in the last sixty years. I'm afraid I don't see it.

   • 2014 September 4, Lenore Taylor, quoting Christopher Pyne, “Capping redundancy payments fixes 'moral hazard', says Christopher Pyne”, in The Guardian‎, →ISSN:

     Pyne said the uncapped scheme introduced a “moral hazard” because it encouraged employers and workers to agree to overgenerous redundancy entitlements, knowing taxpayers would foot the bill if the company failed.

• adverse selection