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The political economy of moral hazard

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  • Jörg Guido Hülsmann

Abstract

Conventional theory explains moral hazard as a consequence of information asymmetries. The present paper proposes an alternative approach. We argue that information asymmetries are just one among several causes of moral hazard and that they entail negative consequences for third parties only accidentally. By contrast, moral hazard also results from government interventionism. And in this case negative consequences are systematic and do result even in the absence of information asymmetries.

Suggested Citation

  • Jörg Guido Hülsmann, 2006. "The political economy of moral hazard," Politická ekonomie, Prague University of Economics and Business, vol. 2006(1), pages 35-47.
    • Handle: RePEc:prg:jnlpol:v:2006:y:2006:i:1:id:544:p:35-47
    DOI: 10.18267/j.polek.544
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    More about this item

    Keywords

    Moral hazard; political economy; information asymmetries; economic systems; Austrian economics;
    All these keywords.

    JEL classification:

    • D00 - Microeconomics - - General - - - General
    • D80 - Microeconomics - - Information, Knowledge, and Uncertainty - - - General
    • K00 - Law and Economics - - General - - - General (including Data Sources and Description)
    • P00 - Political Economy and Comparative Economic Systems - - General - - - General

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