Adverse Selection Is the Tendency for People Who Accept Contracts

question 84

Multiple Choice

Adverse selection is the tendency for people who accept contracts to be those who

• A) buy goods and then regret it later.
• B) buy goods for more than their own reservation price.
• C) want to avoid the lemons problem.
• D) plan to use private information to the disadvantage of the less well-informed party.
• E) engage in a number of searches larger than that specified in the contract.

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Definitions:

Omnipresent

Existing or being present in all places at the same time, often used to describe divine or supernatural entities.

Bystander Effect

A social psychological phenomenon where individuals are less likely to offer help to a victim when other people are present.

Hidden Prejudice

Prejudicial attitudes or biases that are not overtly expressed or are consciously recognized by individuals.

Stereotype

Widely shared and simplified evaluative image of a social group and its members.