What is moral hazard (moreel wangedrag) in the context of financial or insurance contracts?
Answer and explanation
Correct answer: C. A post-contractual change where an insured party acts more recklessly because losses are borne by another
- Step 1: Moral hazard occurs after a contract is signed when an individual changes their behavior to become riskier because they do not bear the full cost of adverse outcomes. Step 2. Examples include driving more aggressively with full coverage or taking excessive banking risks due to government bailouts. Answer: A post-contractual change where an insured party acts more recklessly because losses are borne by another. Why not the others: Pre-contractual concealment is adverse selection; price-fixing is cartelization.
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