An employer faces the problem of adverse selection while recruiting an employee for a job that requires intangible or immeasurable abilities.

Question

Quizplus · Accepted Answer

Adverse selection occurs when there is an information asymmetry between the employer and the potential employee, resulting in the selection of candidates who may not be the best fit for the job. This is particularly true in jobs that require intangible or immeasurable abilities where it is difficult to assess the candidate's skills and abilities during the recruitment process.

An Employer Faces the Problem of Adverse Selection While Recruiting