The fact that individuals whose credit worthiness is less than it appears to be are those who are most willing to borrow funds at any given interest rate is an example of

Question

Quizplus · Accepted Answer

Adverse selection refers to the situation where people who are at a higher risk of defaulting (in this case, those with a lower credit worthiness) are more likely to seek out loans. This can lead to problems for lenders, as they may end up with a higher proportion of risky borrowers than they had intended. Symmetric information refers to a situation where both parties (borrowers and lenders) have the same information about the loan. Moral bonuses and diverse origins are not relevant to this scenario.

The Fact That Individuals Whose Credit Worthiness Is Less Than