Adverse selection exists when
A) the parties on one side of the market, who have information not known to others, self select in a way that benefits the parties on the other side of the market.
B) the parties on one side of a market charge more for something than the parties on the other side of the market want to pay.
C) one party to a transaction changes his or her behavior in a way that is hidden from and costly to the other party.
D) the parties on one side of the market, who have information not known to others, self select in a way that adversely affects the parties on the other side of the market.
E) none of the above
Correct Answer:
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