The ________ problem occurs when people who do not pay for information take advantage of the information that other people have paid for.
A) free-rider
B) moral hazard
C) adverse selection
D) lemons

Question

Quizplus · Accepted Answer

Free-rider problem refers to situations where individuals consume (or benefit from) a good without paying for it. In the context of information, the free-rider problem occurs when individuals obtain information that others have paid for, without contributing to the cost of producing that information. This can be a problem because it reduces the incentives for people to produce and share information, which can lead to overall lower levels of information availability and quality. The other choices (B, C, and D) are different concepts that refer to specific problems in economics and are not directly related to the issue of free-riding with information.

The ________ Problem Occurs When People Who Do Not Pay