Question: t is a situation in which one party gets involved in a risky event knowing that it is protected against the risk and the other

t is a situation in which one party gets involved in a risky event knowing that it is protected against the risk and the other party will incur the cost. It is the tendency to take more risk because the person taking the risk does not pay the cost of taking the risk. A car driver may drive faster knowing that the damage on their car will be covered by the insurance company if they get in an accident.

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