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Meaning of moral hazard is ambiguous – An improved definition

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Abstract

This article reflects on the notion ‘moral hazard’, a concept that refers to some undesired action of the agent in a principal agent setting. Building on the elaborate investigation of [RC12] and after an analysis of previous attempts to define moral hazard, a new definition is proposed. Subsequently, this general definition is applied to credit contract theory.

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© Springer Fachmedien Wiesbaden GmbH, part of Springer Nature 2020

Authors and Affiliations

  1. 1.Universität RegensburgRegensburgGermany

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