Moral Hazard Results from ________ Information,and Adverse Selection Results from ________

question 15

Multiple Choice

Moral hazard results from ________ information,and adverse selection results from ________ information.

• A) private; private
• B) private; public
• C) public; private
• D) public; public
• E) None of the above answers is correct because both are the result of the lemons problem.

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Definitions:

Expert Power

The influence one possesses as a result of experience, special skill, or knowledge in a particular field.

Reward Power

The capacity to influence others through the distribution or promise of benefits and incentives.

Legitimate Power

The authority derived from a formal position or role within an organization, granting the ability to influence others' actions or decisions.

Referent Power

Referent power is a form of personal power that stems from being admired, respected, and liked by others, often leading to influence through the desire of others to be associated with the person.