When an Agent Tries to Exploit an Information Advantage in a Dishonest

question 88

Multiple Choice

When an agent tries to exploit an information advantage in a dishonest way, it is called:

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

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Definitions:

Sinking Fund

A reserved fund into which an organization sets aside money over time, to repay debt or replace a significant asset in the future.

Pension Plan

A type of retirement plan where an employer contributes to a pool of funds set aside for an employee's future benefit.

Contractual Agreement

A legally binding agreement between two or more parties outlining the terms and conditions of a deal.

Benefits

Various forms of non-wage compensations provided to employees in addition to their normal wages or salaries.