Term to Own: “Moral Hazard”

So,  it is taking me a little bit longer to get through Weingast, but here is at least something for the time being.

The term is “moral hazard” and I was unfamiliar with it.

It was in “The Autocrat’s Dilemma”.

Investopedia tells me it’s:

“The risk that a party to a transaction has not entered into the contract in good faith, has provided misleading information about its assets, liabilities or credit capacity, or has an incentive to take unusual risks in a desperate attempt to earn a profit before the contract settles.”

UNC Econ dept. tells me

“The tendency of a person or entity that is imperfectly monitored to engage in undesirable behavior”

But my favorite because it is short and sweet, from Nelson Keyterms:

“taking additional risks because you are insured”

Advertisements

Posted on June 21, 2011, in Uncategorized and tagged , , , , . Bookmark the permalink. Leave a comment.

Leave a Reply

Fill in your details below or click an icon to log in:

WordPress.com Logo

You are commenting using your WordPress.com account. Log Out / Change )

Twitter picture

You are commenting using your Twitter account. Log Out / Change )

Facebook photo

You are commenting using your Facebook account. Log Out / Change )

Google+ photo

You are commenting using your Google+ account. Log Out / Change )

Connecting to %s

%d bloggers like this: