_____ involves one party that takes advantage of information that a second party lacks when the second party is deciding what to buy or sell.

Question

Quizplus · Accepted Answer

Adverse selection occurs when one party in a transaction has more or better information than the other party, typically leading to an imbalance in the transaction where the party with more information can take advantage of the situation. This is common in markets for goods like used cars or health insurance, where sellers or buyers possess information that the other party does not, potentially leading to a market failure.

_____ Involves One Party That Takes Advantage of Information That