The problem of incomplete information-that is, of choosing alternatives without fully knowing the details of available options-refers to which of the following?

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Adverse selection refers to the problem of incomplete information when one party in a transaction has more information than the other, leading to an unfair advantage. It commonly occurs in situations like insurance, where the insured party knows more about their risks than the insurer does. This can lead to adverse selection, where the insurer only ends up insuring high-risk individuals because they are the only ones willing to pay higher premiums. Hidden action, mitigated risk, and moral hazard are related to other types of information problems in decision making.

The Problem of Incomplete Information-That Is, of Choosing Alternatives Without