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