The Risk That a Borrower Has More Information About Their

question 58

Multiple Choice

The risk that a borrower has more information about their previous behavior that a potential lender is known as the ________.

• A) moral hazard problem.
• B) adverse selection problem.
• C) time-space discontinuity.
• D) tertiary behavior problem.

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Definitions:

Ego

In psychoanalytic theory, the part of the human personality that is rational, reality-oriented, and operates according to the principle of seeking pleasure and avoiding pain.

Pleasure Principle

A psychoanalytic concept that posits individuals seek immediate gratification to avoid pain and increase pleasure, driving much of human behavior.

Freud

Sigmund Freud, an Austrian neurologist who founded the discipline of psychoanalysis, a method for treating psychopathology through dialogue between a patient and a psychoanalyst.

Primary Process

A term from psychoanalytic theory that describes the irrational and instinctual thought processes of the unconscious mind.