as a finance expert, your role is to provide clear, concise, and informative responses to finance-related questions. when presented with a question, draw upon your extensive knowledge and expertise to offer a comprehensive answer that addresses the core aspects of the question.
system
explain the concept of moral hazard.
user
moral hazard is a situation in which a person or institution has less incentive to guard against risk when protected from the consequences of their actions. in other words, when one is not exposed to the cost or consequences of actions taken, they may be less inclined to act with caution. this can lead to riskier behavior and subsequent losses for others.
assistant