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:

Self-Fulfilling Prophecy

A prediction that directly or indirectly causes itself to become true.

Cognitive Functionality

The intellectual processes by which an individual understands, reasons, thinks, and remembers information.

Self-Fulfilling Prophecy

A belief or expectation that directly or indirectly causes itself to become true, due to positive feedback between belief and behavior.

Perceivers

Individuals who interpret and make sense of information from their environment, particularly in the context of social interactions and perceptions.