Adverse Selection Is

question 402

Multiple Choice

Adverse selection is

• A)the tendency of a person who is imperfectly monitored to engage in dishonest or otherwise undesirable behavior.
• B)an action taken by an uninformed party to induce an informed party to reveal information.
• C)the failure of majority voting to produce transitive preferences for society.
• D)the tendency for the mix of unobserved attributes to become undesirable from the standpoint of an uninformed party.

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Definitions:

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Uniform Commercial Code

A comprehensive set of laws governing commercial transactions in the United States, facilitating the uniformity and predictability of commercial activities across different states.

Common Law

A body of legal rules that have been made by judges as they issue rulings on cases, as opposed to rules and laws made by the legislature or in official statutes.

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A body of laws, conventions, and treaties that govern international private business and other matters involving ships, shipping, or offenses occurring on open water.