An Example of Adverse Selection Is

question 78

Multiple Choice

An example of adverse selection is

• A) when high-quality loan applicants drive low-quality loan applicants out of the market for bank loans.
• B) when a person discovers that he has a serious illness and then purchases health insurance.
• C) when consumers are not willing to pay top dollar for a used car because of imperfect information.
• D) All of the above are examples of adverse selection.

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Definitions:

Internal Attribution

The process of ascribing the cause of behavior to an internal characteristic of the actor, rather than to external factors.

External Attribution

The process of attributing the cause of one's own or others' behaviors to external factors or situational influences.

Self-Presentational Motivation

The drive to control the impressions others have of us; motives underlying our desire to present ourselves in a certain way to others.

Social Self-Efficacy

A person's confidence in their ability to engage in and succeed at social interactions and relationships.