Two Key Consequences of Asymmetric Information Are Adverse Selection and Moral

question 1

Essay

Two key consequences of asymmetric information are adverse selection and moral hazard.Define each concept,provide one example of each,and explain how the two concepts differ.

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Definitions:

Negatively Punished

A term in behavioral psychology referring to the decrease in the frequency of a behavior due to the removal of a pleasant stimulus following the behavior.

Positive Reinforcer

A stimulus which, when presented after a behavior, increases the likelihood that the behavior will occur again.

Negative Reinforcer

A stimulus whose removal following a behavior increases the likelihood that the behavior will occur again in the future.

Primary Reinforcers

Innate reinforcing qualities, such as food and water, that fulfill basic biological needs and do not require learning to be effective.