Alone has some nice writing on the moral hazard concept: <a href="http:&#x2F;&#x2F;thelastpsychiatrist.com&#x2F;2007&#x2F;08&#x2F;the_moral_hazard.html" rel="nofollow">http:&#x2F;&#x2F;thelastpsychiatrist.com&#x2F;2007&#x2F;08&#x2F;the_moral_hazard.html</a><p><i>&quot;If you behave badly because you know you&#x27;ll get away with it, that&#x27;s being &quot;bad.&quot;<p>A Moral Hazard is different.  If you behave &quot;worse&quot; than you would have otherwise, solely because you know that you won&#x27;t have to bear the consequences, then you have a Moral Hazard.<p>I&#x27;ll emphasize: the key is that your behavior is in itself not necessarily &quot;bad.&quot;  It is simply worse than your behavior otherwise would have been, because you know there won&#x27;t be consequences.<p>Here&#x27;s why it&#x27;s called a Moral Hazard: if there are no external consequences, the only thing that would prevent you from behaving worse is an internal set of rules.<p>Where do these internal rules come from?&quot;</i>