Johan is a recent graduate who states that he has interned at a major accounting firm so that his value as a candidate for employment increases.A startup recruits Johan based on his stated credentials without verifying them.Two days into the job, Johan's team lead realizes that Johan does not know much of what he claimed to know during the interview.This scenario best exemplifies _____.

Question

Quizplus · Accepted Answer

This scenario best exemplifies adverse selection. In general, adverse selection occurs when information asymmetry increases the likelihood of selecting inferior alternatives. In principal-agent relationships, for example, adverse selection describes a situation in which an agent misrepresents his or her ability to do the job.

Johan Is a Recent Graduate Who States That He Has