The tendency for people to enter into agreements in which they can use their private information to their own advantage and to the disadvantage of the less informed party is known as
A) adverse selection.
B) a pooling selection.
C) moral hazard.
D) the market for oranges.
E) a signal.

Question

Quizplus · Accepted Answer

Adverse selection occurs when one party has more information than the other party in a transaction, leading to an unfair advantage. In this case, the informed party may use their private information to negotiate a better deal for themselves at the expense of the less informed party.

The Tendency for People to Enter into Agreements in Which