The adverse selection problem is least likely in which of the following occupations?

Question

Quizplus · Accepted Answer

Adverse selection is a problem that occurs when an individual or a company has asymmetric information, which means that they know more than the other party about a particular situation. This can lead to one party making an unfavorable decision, which can be costly. In the case of a barber, there is less informational asymmetry, as the quality of the service can be actively seen during the haircut. Therefore, adverse selection is less likely to occur.

The Adverse Selection Problem Is Least Likely in Which of the Following