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Moral Hazard and Antifragility

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Moral Hazard and Antifragility

Chris Wong
Apr 17, 2023
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Moral Hazard and Antifragility

chr.iswong.com
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Moral hazard is when the consequences are absorbed by a third party.  An example is insurance, if something goes wrong, you get made whole by someone else taking a loss.

Antifragility is the idea that some entities improve when a negative event happens.  An example is Roman concrete.  When fractures in this material happen, the concrete actually rebuilds stronger.

If there's moral hazard, there will not be antifragility.  The entity will not receive a shock to the system.

Therefore, if antifragility is a good thing, (and I don't think anyone familiar with the concept would disagree) moral hazards are something to be avoided.

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Moral Hazard and Antifragility

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