What is moral hazard? 。 Definition:Moral hazard is the tendency for insurance against loss to reduce incentives to prevent or minimize the cost of loss.1 This term has been used to distinguish between: natural hazards that cause losses(like lightning strikes) moral hazards like carelessness and fraud that can lead to losses and are the result of decisions by humans. 1Source:Baker(1996). Bhattacharya,Hyde and Tu-HealthEconomicsBhattacharya, Hyde and Tu – Health Economics What is moral hazard? • Definition: Moral hazard is the tendency for insurance against loss to reduce incentives to prevent or minimize the cost of loss.1 • This term has been used to distinguish between: • natural hazards that cause losses (like lightning strikes) • moral hazards like carelessness and fraud that can lead to losses and are the result of decisions by humans. 1Source: Baker (1996)