Asked by Nacho Carrascosa Brotons on Sep 24, 2024
Which firm is not dealing with adverse selection
A) a manufacturer forgoes a usual 90 day probationary period for new employees
B) a temporary clerical agency requires a typing test
C) a manufacturer requires suppliers to be ISO 9000 certified
D) Smokers get the worse life insurance rates as non-smokers
Adverse Selection
A situation where asymmetric information leads to the selection of undesirable risks by one party in a contract.
- Distinguish between scenarios that illustrate and do not illustrate negative selection.
Learning Objectives
- Distinguish between scenarios that illustrate and do not illustrate negative selection.