Adverse selection and moral hazard are examples of
A) asymmetric information.
B) selection problems.
C) risk aversion.
D) mechanism designs for dealing with informational problems.

Question

Quizplus · Accepted Answer

Adverse selection and moral hazard are both examples of asymmetric information, which is when one party has more information than the other in a transaction. This can lead to problems in markets such as insurance or lending, where one party may take advantage of the other's lack of information.

Adverse Selection and Moral Hazard Are Examples of