Which of the Following Is an Example of the Bad

question 15

Multiple Choice

Which of the following is an example of the bad apple effect?

• A) Denny has always been a bit deviant. Since he has been deviant at many times and in many situations, he is likely to be deviant many more times and in many more situations in the future as well.
• B) Tanya experiences social rejection by her peers. As a result, she begins to shoplift and vandalize buildings.
• C) Fifth-grader Ursula began playing pranks on her teacher about a month ago-throwing things at him when his back was turned and making derogatory jokes at his expense. Now, the class is in mayhem because gradually, everyone else in the class began copying her.
• D) Edwin is eight, and he experiences social rejection by his peers. As a result, he learns to socially reject other children as soon as he meets them.

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Definitions:

Adverse Selection

Adverse selection is a situation in which an asymmetry of information between buyers and sellers results in the failure to facilitate optimal market outcomes, often seen in insurance markets where those most likely to claim insurance are also the most likely to purchase it.

Moral Hazard

The tendency of a person or entity to take risks because the negative consequences of the risk will be borne by another party.

Unobservable Actions

Actions taken by individuals or entities that cannot be seen or monitored by others, often discussed in the context of economics or game theory.

Moral Hazard

A situation where one party is more likely to take risks because the negative consequences of the risk will be borne by another party.