Adverse Selection Occurs When There Is

question 113

Multiple Choice

Adverse selection occurs when there is

• A) full information.
• B) unobserved behavior.
• C) an unobserved characteristic.
• D) a worker who shirks because his boss does not watch him.

---

Definitions:

Relevant Expertise

Possession of skills and knowledge directly applicable and beneficial to a specific task, job, or field of study.

Confidential Employee Data

Relates to personal and sensitive information about employees that is protected by privacy laws and requires secure handling by employers.

Information Risk

The risk of loss due to the failure of an information system or from the unauthorized release, misuse, alteration, or destruction of information.

Cost-Benefit Analysis

A method of evaluating the relative advantages and disadvantages of a project or decision by quantifying its costs and benefits.