According to Noble Price winner Professor Paul Krugman, moral hazard is defined as "any situation in which one person makes the decision about how much risk to take, while someone else bears the cost if things go badly." (see Krugman, Paul, 2009. The Return of Depression Economics and the Crisis of 2008). If this definition is an accurate description of what moral hazard is, can we conclude that it falls within the domain of interconnected decision making, and thus can be dealt with game theory? Please discuss your answer.

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The concept of moral hazard as defined by Professor Paul Krugman does involve interconnected decisio... View the full answer