Moral Hazard Results from ________ Information,and Adverse Selection Results from ________

question 15

Multiple Choice

Moral hazard results from ________ information,and adverse selection results from ________ information.

• A) private; private
• B) private; public
• C) public; private
• D) public; public
• E) None of the above answers is correct because both are the result of the lemons problem.

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Definitions:

Reciprocity Norm

A social norm that entails individuals returning the kind of treatment they have received from others, promoting cooperative and altruistic behavior.

Diffusion of Responsibility

A phenomenon in social psychology where individuals feel less compelled to take action or assume responsibility in the presence of a large group of people.

Reciprocity Norm

A social norm that dictates that people should return the favor or kindness that has been done to them.

Social Exchange Theory

A social-psychological and sociological perspective that explains social change and stability as a process of negotiated exchanges between parties.