In Markets with Asymmetric Information

question 144

Multiple Choice

In markets with asymmetric information,

• A)moral hazard causes adverse selection which in turn causes asymmetric information.
• B)adverse selection causes moral hazard which in turn causes asymmetric information.
• C)asymmetric information causes moral hazard and then it causes adverse selection.
• D)asymmetric information causes adverse selection and then it causes moral hazard.

---

Definitions:

Decision by Majority

A decision-making process in which the option that receives more than half of the votes is chosen.

Restricted Communication Network

A pattern of interaction in which subgroups have limited communication with one another.

Little Creativity

Describes a minimal level of originality and innovation in thinking or making.

Decision by Minority

Decision by minority refers to a situation where a smaller group, rather than a majority, makes a decision on behalf of the whole group, often seen in consensus-based or authoritarian systems.