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”