IN CONTEXT
Decision making
Kenneth Arrow (1921–)
From 1600 “Moral hazard” is used to describe situations where individuals may not be honest.
1920s–30s US economist Frank Knight and British economist John Maynard Keynes grapple with the problem of uncertainty in economics.
1970 US economist George Akerlof publishes The Market for Lemons, looking at the problem of limited information about a good’s quality.
2009 Mervyn King, governor of the Bank of England, describes government bailouts of the banking system as “the biggest moral hazard in history.”
The standard model of economic behavior, first set out by Adam Smith in the ...
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