# Moral Hazard

*Macro & Economy — Finicade finance glossary*

Moral hazard is the change in behaviour that follows being protected from consequences: insured drivers take more risk, rescued banks lend more freely.

Moral hazard is the change in behaviour that follows being protected from the consequences: insured drivers take more risk, banks expecting rescue lend more aggressively. It arises after a contract is signed, which distinguishes it from adverse selection, a problem that arises before. Deductibles, co-payments and capital requirements all exist to keep some skin in the game precisely because of it.

**Also known as:** moral hazard problem

**Related terms:** [Adverse Selection](https://finicade.com/glossary/adverse-selection), [Agency Problem](https://finicade.com/glossary/agency-problem), [Systemic Risk](https://finicade.com/glossary/systemic-risk), [Deposit Insurance](https://finicade.com/glossary/deposit-insurance), [Insurance](https://finicade.com/glossary/insurance)

Source: https://finicade.com/glossary/moral-hazard