Adverse selection is created by
A) incentives to change behavior after two parties have reached an agreement.
B) risk.
C) lump-sum taxes.
D) private information.

Question

Quizplus · Accepted Answer

Adverse selection occurs when one party in a transaction has more or better information than the other, typically before the transaction occurs, leading to an imbalance. This is often due to private information.

Adverse Selection Is Created by