A Moral Hazard of Global Proportions: The Naked Economist - Yahoo! Finance

Suppose you could swagger into a bar, jump the queue for ordering drinks, and hurl insults at the other patrons, all the while relentlessly hitting on the wives and girlfriends of the male customers.

Then, just when some guy with a big Harley-Davidson tattoo on his forehead is about to break a bottle over your head, suppose you could quickly summon a surrogate to come fight on your behalf.

Do you think this arrangement would make you more or less inclined to behave in ways that instigate bar fights?

Consequence-Free Behavior

More, according to most economists -- and common sense. It's not that economists spend a lot of time studying bar fights (or participating in them); rather, there is an important concept in economics related to this scenario.

It's called moral hazard, and the idea is that individuals behave differently -- and sometimes badly, from society's standpoint -- when they don't have to bear the full cost of their actions.