MORAL HAZARD is an economic term that applies whenever people are protected, or believe they are protected, from the normal consequences of their actions, and so are willing to take greater risks. Whenever you see someone ignoring the potential consequences of risky behavior because they believe they are immune from the downside, you are witnessing moral hazard at work.
 
 
  Moral hazard is an economic term that applies whenever people are protected, or believe they are protected, from the normal consequences of their actions, and so are willing to take greater risks. Whenever you see someone ignoring the potential consequences of risky behavior because they believe they are immune from the downside, you are witnessing moral hazard at work.