What does 'moral hazard' mean? A scholar of financial regulation explains why it's risky for the government to rescue banks
- Written by Cassandra Jones Havard, Professor of Law, University of South Carolina
A real payload.tiero/iStock via Getty Images Plus“Moral hazard” refers to the risks that someone or something becomes more inclined to take because they have reason to believe that an insurer will cover the costs of any damages.
The concept describes financial recklessness. It has its roots in the advent of private insurance companies a...