-_____ occurs when unobservable qualities are valued incorrectly because of a lack of information.

Question

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Adverse selection occurs when one party in a transaction has more or better information than the other party, typically leading to a misjudgment of value due to the lack of information. This is common in markets where the quality of a product or service is difficult to observe in advance, leading to potentially higher risks for one of the parties involved.

-_____ Occurs When Unobservable Qualities Are Valued Incorrectly Because of a Lack