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insuranceguruyesterday at 11:37 PM0 repliesview on HN

That profit optimal caricature is what we call moral hazard in risk management. When a system is optimized purely for short-term extraction it offloads the long-term tail risk onto the consumer or society. We see this with cheap IoT devices that have zero security updates the manufacturer saves $0.50 on a chip and the consumer eventually pays for it in identity theft or botnet attacks. It’s an externality that isn't priced in.