The term moral risk or English moral Hazard (literal "“moral endangerment"”, engl. Subjective risk or moral temptation) describes the danger of a change of behavior, after alleged omission of the risk. Originally a term from the insurance science. Usually the term is also economically used.

Moral a Hazard threatens, if there is a contradiction between what for the public (for the collective) and what for the individual is reasonable, if a contradiction between and is thus present. Therefore the moral Hazard is closely related to the Moral a Hazard threatens, if a higher instance, a government, or a collective instance, e.g. want to e.g. implement an insurance, a this however by the individuals in favor of its own interests is used and with it possibly occurred.

Examples

Insurance

• Drivers are received after conclusion of an insurance a higher risk with driving a car, because by the insurance a possible damage was covered. - Solution type: More highly selfkept the risk for the insurance reduces, decreased on the other hand in addition, the protection by the insurance for the insurant - conflicting aims.

Employee employer relationship

• Employees reduce their achievement, because the employers control little. - Solution type: payment after chord will stimulus employees. ("“Principal agent problem"”)
• Deductions of the readiness to perform of officials by not subject to noticeness and secured requirements for pension (same applies naturally also with similarly safe employer-employee relationships in the free economy)

Economics generally

• If a large company broke threatens to go, it is saved by the state, because it would otherwise possibly drag the whole national economy along ("“too big tons fail"”). As consequence of it companies behave risky in the confidence on the fact that them if necessary the state must jump (example "“bailing out"” from general of engine by the US Government).
• With financial crises of individual states the international institutions and the large industrial nations see themselves forced to help out with money so that the individual state does not tear the world economy with itself. This can lead to risky behavior of individual governments and from capital investors, who trust in the fact that if necessary must be helped to them.
• "“Greenspan PUT"”: A general purge of the share quotations can impair serious the investment activity and release an economic crisis. As counter measure the central bank can buy up shares in the Crash case, in order to prevent an expansion of the share noise. In consequence of it the share quotations lie more highly, because the stock brokers rely on such an interference of the central bank in the emergency. This presumed warranty by the central bank against a general share quotation purge is called after the former US central bank boss Alan Greenspan and after the normal security business against course purge, the PUT options, "“Greenspan PUT"”.

Health system

A free health system loads in addition in to over-stress and raise the price of the system by unnecessary physician attendance (e.g. to the "“blue making"”). Here can be entgegengesteurt for example with practice fees, Karenztagen and/or education.

See also:

Tragik that common land, principle aluminum agent theory, free rider behavior (economics), moral hazard,

See N.N from Fischer compact, in on 16 November 2004; and N.N from LEO (doing Munich), in http://dict.leo.org, resuming "“moral hazard"” on 16. November 2004; as well as Mankiw, fundamentals of the political economy, 631.

Articles in category "Moral Hazard"

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Related Websites

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• Moral hazard - Wikipedia, the free encyclopedia
  In finance, low level of effort by the agent (employee) is called moral hazard problem according to agency theory. The more autonomy the agent enjoys and ...


• Moral Hazard and Adverse Selection
  Welcome to CyberEconomics, the complete, easy-to-use, online economics textbook.


• The New Yorker: Fact
  The idea is known as