Firms that seek to avoid hiring lazy workers that assert they are hardworking are trying to avoid
A) adverse selection.
B) moral hazard.
C) screening.
D) signaling.

Question

Quizplus · Accepted Answer

Firms that seek to avoid hiring lazy workers by screening them for their dedication and work ethic are trying to avoid adverse selection. Adverse selection occurs when one party in a transaction has more information than the other party, and this information asymmetry leads to unfavorable outcomes. In this case, the lazy workers have information about their lack of work ethic that the firm may not have, which could lead to unfavorable hiring decisions if the firm cannot distinguish between hardworking and lazy candidates.

Firms That Seek to Avoid Hiring Lazy Workers That Assert