What phrase describes inferior management decision making based on information asymmetries?
A) moral hazard
B) adverse selection
C) rationality
D) blindness in truth

Question

Quizplus · Accepted Answer

Adverse selection refers to a situation where one party has more information than the other party, which leads to inferior decision making. In this case, management may make decisions based on incomplete or inaccurate information, resulting in adverse consequences for the organization. Moral hazard refers to a situation where one party takes on risk because they know another party will bear the cost of that risk. Rationality refers to the process of making decisions based on logical and consistent reasoning. Blindness in truth is not a commonly used phrase in this context.

What Phrase Describes Inferior Management Decision Making Based on Information