When Informed Parties Prefer Trading Circumstances That Are Disadvantageous to Uninformed

question 31

Multiple Choice

When informed parties prefer trading circumstances that are disadvantageous to uninformed trading partners,economists say that ________ has occurred.

• A) information disequilibrium
• B) moral hazard
• C) signaling
• D) adverse selection

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Definitions:

Hierarchy Of Needs

A theory in psychology proposed by Abraham Maslow that posits a five-tier model of human needs, ranging from basic (physiological) to more complex (self-actualization) needs.

Abraham Maslow

An American psychologist known for creating Maslow's hierarchy of needs, a theory of psychological health predicated on fulfilling innate human needs.

Arousal Theory

A theory of motivation that suggests people seek to maintain an optimal level of arousal, not too high or too low, for optimal performance.

Instinct

An innate, typically fixed pattern of behavior in animals in response to certain stimuli, not learned through experience.