The two major problems caused by asymmetric information are
A)unfairness and inequality.
B)the moral-hazard problem and the principal-agent problem.
C)unemployment and an adverse selection.
D)the moral-hazard problem and inequality.

Question

Quizplus · Accepted Answer

Asymmetric information often leads to the moral-hazard problem, where one party takes on excessive risk because they do not bear the full consequences, and the principal-agent problem, where there is a conflict of interest between a principal (such as an owner) and an agent (such as an employee or representative) acting on their behalf.

The Two Major Problems Caused by Asymmetric Information Are