Private Information-Collection Firms Fail to Eliminate the Adverse Selection Problem

question 72

Multiple Choice

Private information-collection firms fail to eliminate the adverse selection problem because

• A)the law does not allow them to disclose private information about the creditworthiness of firms.
• B)they do not monitor borrowers after loans have been made.
• C)some investors who do not pay for their services will still profit from them.
• D)most companies refuse to provide them with any information.

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Definitions:

Cultural Personality

describes the way in which culture shapes an individual's habits, attitudes, and overall personality.

Power Distance

A cultural dimension that reflects the degree to which less powerful members of a society accept and expect that power is distributed unequally.

Individualism

A social theory favoring freedom of action for individuals over collective or state control.

Uncertainty Avoidance

A cultural dimension that describes the extent to which people in a society are uncomfortable with uncertainty and ambiguity.