When informed parties prefer trading circumstances that are disadvantageous to uninformed trading partners,economists say that ________ has occurred.
A) information disequilibrium
B) moral hazard
C) signaling
D) adverse selection

Question

Quizplus · Accepted Answer

Adverse selection refers to a situation in which informed parties have an advantage over uninformed parties in trading circumstances. This can lead to unfavorable outcomes for uninformed partners.

When Informed Parties Prefer Trading Circumstances That Are Disadvantageous to Uninformed