The specificity of the asset (or investment)leads to the possibility of:
A) collusion.
B) prisoner's dilemma.
C) opportunism.
D) None of the preceding statements is correct.

Question

Quizplus · Accepted Answer

The specificity of an asset or investment refers to how specialized and unique it is, which increases the likelihood of opportunism. Opportunism occurs when one party takes advantage of another because of the specific nature of the asset, making it difficult or costly for the other party to switch to another investment or asset. This can lead to problems such as hold-up and moral hazard. Collusion and prisoner's dilemma are less likely to result from asset specificity.

The Specificity of the Asset (Or Investment)leads to the Possibility