Asked by AnkiT SharmA on Sep 24, 2024

​Adverse selection is a

A) ​Pre-contractual problem
B) Post contractual problem
C) Post firing problem
D) ​None of the above

Adverse Selection

A situation where asymmetric information leads to the selection of poor risks, often seen in insurance markets.

Pre-contractual Problem

Issues that arise before the formation of a contract, often relating to the disclosure of information or negotiation terms.

  • Understand the notion of adverse selection as an issue that occurs before a contract is established.