The Moral Hazard Problem Is the Tendency of Some Parties

question 122

True/False

The moral hazard problem is the tendency of some parties to a contract to alter their behavior as a
result of the contract in ways that are costly to the other party.

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Definitions:

Project Scope

The detailed outline of a project's goals, deliverables, features, and tasks, as well as what is excluded.

Scope Creep

The gradual expansion of a project's scope, often resulting in delays, cost overruns, and deviation from original goals without proper authorization.

Step Change

A significant and rapid change or transformation, often improving a situation or system dramatically.

Crashing

The process of expediting project completion typically by adding more resources or by working extra hours, often resulting in increased costs.