moral hazard
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Puzzle #80 · August 20, 2025
In economics, a moral hazard is a situation where someone has an incentive to take on risk, including excessive risk, because they are protected against the full cost associated with that risk.
In 2008 when large banks, (banks that were too big to fail) were bailed out by the government, many argued this created, or perpetuated, a moral hazard, because banks would, in the future, again take on too much risk knowing that the government would bail them out.
In 2008 when large banks, (banks that were too big to fail) were bailed out by the government, many argued this created, or perpetuated, a moral hazard, because banks would, in the future, again take on too much risk knowing that the government would bail them out.
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The expression moral hazard has appeared in 1 puzzle:
- Puzzle #80 on August 20, 2025
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