Question

Give another example of a moral hazard problem?

Short answer

Damaging own property, misrepresenting to claim government assistance

Step-by-step solution

Definition of moral hazard

A term associated with insurance contracts and government programs is moral hazard where the individual shows the tendency to take greater risk than actual to take realize benefits when financial transaction take place.

Examples of moral hazard problem

There have been instances where people go to the extent of damaging their own property which is insured against the risk. Similarly, people also behave very casually with their health.

In addition, the government assistance during natural disasters, unemployment, food scarcity or bailout to stressed financial institutions lead to risky behavior hence pose hazard problem.