Which of the following does NOT cause adverse selection?
A)Sellers having private information
B)Buyers having private information
C)Unobservable actions
D)Price-related private information

Question

Quizplus · Accepted Answer

Price-related private information is not a cause of adverse selection. Adverse selection occurs when one party in a transaction has more information than the other, leading to an uneven distribution of risk. Choices A, B, and C all describe situations where one party has private information that could lead to adverse selection.

Which of the Following Does NOT Cause Adverse Selection