Adverse selection is the tendency for people who accept contracts to be those who
A) buy goods and then regret it later.
B) buy goods for more than their own reservation price.
C) plan to use private information to the disadvantage of the less well-informed party.
D) engage in a number of searches larger than that specified in the contract.

Question

Quizplus · Accepted Answer

Adverse selection occurs when one party in a transaction has more information than the other, leading them to exploit this advantage, often to the detriment of the less informed party.

Adverse Selection Is the Tendency for People Who Accept Contracts