Answered: A Grab driver who does not own the car…

A Grab driver who does not own the car is very harsh on his driving as he knows that the car is not his. Is this an example of a moral hazard problem? How does moral hazard issue arise?

ENGR.ECONOMIC ANALYSIS

14th Edition

ISBN:9780190931919

Author:NEWNAN

Publisher:NEWNAN

Chapter1: Making Economics Decisions

Section: Chapter Questions

Problem 1QTC

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Concept explainers

Moral Hazard

The moral is a person's behavior towards himself /herself, society, organization, and others. Hazard is something that is happening and is not good. A person may be morally good or bad. It depends on his attitude, ethics, integrity, and values. A person may have the highest reverence for money to that for the truth. In this case, the person may lie and it is said that the person is morally bad.

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A Grab driver who does not own the car is very harsh on his driving as he knows
that the car is not his. Is this an example of a moral hazard problem? How does
moral hazard issue arise?

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