Adverse selection happens because
A)One of the parties has more information about itself then the other party
B)Individuals that the principle want to least select are the ones more likely to apply
C)Parties most likely to accept an offer would be least qualified
D)All of the above

Question

​Adverse selection happens because
A)​One of the parties has more information about itself then the other party
B)Individuals that the principle want to least select are the ones more likely to apply
C)Parties most likely to accept an offer would be least qualified 
D)​All of the above

Quizplus · Accepted Answer

Adverse selection occurs when one party in a transaction has more information than the other, often leading to situations where those most eager to engage (e.g., in insurance or employment) are those the other party would least desire due to risk factors or qualifications not apparent at the outset. This encompasses all the scenarios described in the options.

​Adverse Selection Happens Because

Adverse Selection Happens Because