These theories highlight the problems of moral hazard in the principal-agent relation. |
But moral hazard reduces the ability to reallocate risk among different economic agents. |
When this moral hazard is present, credit flows rapidly into inelastically supplied assets, such as real estate. |
We are using IMF as shorthand for the entire grouping of moral hazard intensifiers we listed at the outset! |
For example, if moral hazard is associated with deposit insurance, the greater risks banks take may demand stronger preventive techniques. |
There are, however, important aspects to address such as moral hazard and potential implicit public support in very turbulent times. |