The concept of moral hazard was publicly discussed in the context of the 2007-2008 financial crisis because
◦ it was feared that the U.S. government was taking advantage of its special knowledge in the financial markets.
◦ it was feared that government bailouts of financial institutions would reduce competition in financial markets.
◦ it was argued that the U.S. government should invoke moral hazard to sustain the financial sector.
◦ it was feared that government bailouts of financial institutions would encourage the institutions to continue their risky behaviour.
◦ it was claimed that moral hazard was necessary to prevent large U.S. financial institutions from going bankrupt.
Concept map
Moral Decisions and the vmPFC
Interpreting Social and Emotional Context
Kohlberg's Stages of Moral Development
European Culture in a Global Context
Mole concept