Definition of moral hazard in English:

moral hazard


mass nounEconomics
  • 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.’
    • ‘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.’