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WordNet-Online
Definitions from WordNet | ||||
Definitions from the WebMoral HazardDefinition: Moral hazard refers to the risk that individuals or organizations may engage in morally questionable or irresponsible behavior due to the protection or safety net provided by insurance, contracts, or other forms of assistance. Senses/Usages:1. Economic SenseNoun: In economics, moral hazard represents the increased chances of reckless behavior or negligence by individuals or institutions when they are insulated from the potential consequences of their actions. Example Sentence: The government bailout of the banks raised concerns about moral hazard, as it seemingly rewarded their risky behavior without imposing sufficient consequences. 2. Insurance SenseNoun: Moral hazard can also refer to the situation in insurance where policyholders might take more risks or act carelessly, knowing that they are protected by insurance coverage. Example Sentence: Filing multiple insurance claims for minor damages might be viewed as a moral hazard, potentially leading to higher premiums for everyone. 3. Business SenseNoun: In business, moral hazard indicates the risk that managers or employees, due to their control over company resources, might act in their own self-interest rather than in the best interest of the organization. Example Sentence: Excessive executive bonuses without proper performance metrics can contribute to moral hazard, as managers may focus on short-term gains to maximize their own compensation. 4. Political SenseNoun: Moral hazard can also be used in politics to describe situations where politicians or governments take actions that might have negative consequences but are politically beneficial for them. Example Sentence: Some critics argue that the bailout of failing industries creates a moral hazard for governments, as it encourages risky behavior without addressing the underlying issues. Related Products: | ||||
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