noun

• Lack of incentive to guard against risk where one is protected from its consequences, e.g. by insurance.

  ‘He is creating moral hazard by making investors think that investment risks are minimized simply by skimming an independent stock research report.’

  More example sentences

  • ‘The recent history of the credit system can be thought of as the evolution of increasingly successful methods of reducing the risk premium caused by hidden information and moral hazard.’
  • ‘For example, if moral hazard is associated with deposit insurance, the greater risks banks take may demand stronger preventive techniques.’