​One difference between moral hazard and adverse selection is

A) ​Adverse selection has to do with unobservable characteristics of individuals
B) Adverse selection has to do with unobservable actions of individuals
C) Adverse selection is when individuals most appropriate for positions are most likely to apply for them
D) ​Adverse selection is when you choose the wrong answer on a test

Adverse Selection

A situation in economics where one party in a transaction has more or better information compared to the other party, potentially leading to an inequitable outcome.

Unobservable Characteristics

Traits or factors not immediately apparent or measurable that can influence outcomes or decisions.

Unobservable Actions

Actions taken by individuals or entities that cannot be directly observed or monitored, often leading to issues of information asymmetry.