Adverse selection can occur when the:
I. buyer has more information than the seller.
II. seller has more information than the buyer.
III. buyer and seller have complete information.
A) I, II, and III
B) II
C) I and II
D) III

Question

Quizplus · Accepted Answer

Adverse selection occurs when one party in a transaction has more information than the other, either the buyer (I) or the seller (II). It does not occur when both parties have complete information (III).

Adverse Selection Can Occur When The