A difference between moral hazard and adverse selection is that
A)moral hazard deals with pre-contractually determined public information
B)moral hazard deals with post-contractually determined private information
C)adverse selection deals with pre-contractually determined private information
D)adverse selection deals with post-contractually determined public information

Question

​A difference between moral hazard and adverse selection is that
A)​moral hazard deals with pre-contractually determined public information
B)moral hazard deals with post-contractually determined private information
C)adverse selection deals with pre-contractually determined private information
D)​adverse selection deals with post-contractually determined public information

Quizplus · Accepted Answer

Moral hazard involves changes in behavior after a contract is made, based on private information, while adverse selection involves private information known before a contract is made.

​A Difference Between Moral Hazard and Adverse Selection Is That

A Difference Between Moral Hazard and Adverse Selection Is That