The moral hazard exists when people tend to take more risks, knowing that someone else will bear the costs for them, which is a dangerous thinking to our economy because it could cause a fraud and global financial collapse. This state of hazard can be created by laws, contracts and regulations, but the most common example is form the insurance and mortgage industries. A taxes economist, says the moral hazard at its basic level is part of what economist called asymmetric information problem. One part of the transaction has the better information than the other, typically who is seeking for the car insurance knows more about the risk than the company that is providing the insurance. This is a problem for insurance company because people may fake robberies, fire or any kinds of injuries since the insurance company bears the risk. Despite the moral hazard is such a problem for insurance companies and the mortgage industries, government cannot make up a law that wipe these tempting traps out due to several reasons. First of all, there is always a possibility that the bank would want so much collateral or the co-insurance would become so onerous, that all the efforts that made to protect people would ultimately shut the market down, and that all the tools that they used to prevent moral hazard become more complicated that the market just does not work anymore. We can never remove all moral hazard. If we try, we risk eliminating the entire mortgage and insurance industries. Moral hazard can actually be a good thing for the economy. In Canada, bankruptcy is a lot more forgiving than in other countries, which means robbers who fail are not put in a prison for their whole life. According to his research, more lenient the country’s bankruptcy law, the more entrepreneurs’ population.