Which of the following are a means of eliminating the undesirable effects of adverse selection?

Question

Quizplus · Accepted Answer

Both a long term relationship and writing a contract to guarantee the quality are means of eliminating the undesirable effects of adverse selection. A long-term relationship allows for repeated interactions between the parties, building trust and reducing the information asymmetry that leads to adverse selection. A contract that guarantees quality provides assurance to the buyer that the seller will provide a product or service that meets certain standards, reducing the risk of adverse selection.

Which of the Following Are a Means of Eliminating the Undesirable