0 votes

MORAL HAZARD defined

It seems few people understand the term:

Moral hazard occurs when a party insulated from risk behaves differently than it would behave if it were fully exposed to the risk.

A simple example of this is seen when people rent a car... they beat the hell out of a car they don't own and are not responsible for it's maintenance and upkeep. But someone who owns the car, has the long term interests of the vehicle tied directly to their own interests.

Moral Hazard is regularly mentioned by Dr Paul,... we need to inform people what it means and thereby just HOW RIGHT DR PAUL IS!



Trending on the Web