FILE SELECTED // FILE 00
Moral Hazard
“Protection from a consequence can change behavior that others cannot observe.”
01 / SUMMARY
In short
Moral hazard arises when, after an agreement, one party takes hard-to-observe actions without bearing all their consequences. Coverage, monitoring, and incentives try to preserve protection without erasing responsibility.
03 / SCENE
In the wild
A full warranty may reduce maintenance care when the decision-maker does not pay the later repair cost.
04 / LIMIT
The limit
“Moral” is historical terminology; the model does not diagnose bad ethics or predict that every insured person behaves worse.
FINAL NOTE
What remains
Find which action changes after the agreement, who can observe it, and where the cost lands.