Adverse Selection Is the Tendency for People Who Accept Contracts

question 84

Multiple Choice

Adverse selection is the tendency for people who accept contracts to be those who

• A) buy goods and then regret it later.
• B) buy goods for more than their own reservation price.
• C) want to avoid the lemons problem.
• D) plan to use private information to the disadvantage of the less well-informed party.
• E) engage in a number of searches larger than that specified in the contract.

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