Revisiting Moral Hazard
September 24, 2008
Don't get me wrong. I'm not going soft on moral hazard, the idea that people behave recklessly if they don't have to deal with the consequences of their actions. But I do think moral hazard is often misunderstood, rarer than we think, and feared more than necessary. And unlike many experts out there, I find little moral hazard in the recent interventions by the Treasury and Federal Reserve.