Moral hazard

Moral hazard is when people have insurance against a certain event, they are less likely to guard against that event occurring.

Definition

According to Principles of Economics by Timothy Taylor (3rd edition),

Moral hazard. When people have insurance against a certain event, they are less likely to guard against that event occurring.

According to Macroeconomics by Mankiw (7th edition),

Moral hazard. The possibility of dishonest behavior in situations in which behavior is imperfectly monitored; for example, in efficiency-wage theory, the possibility that low-wage workers may shirk their responsibilities and risk getting caught and fired.