Adverse Selection

Multiple Choice

Adverse selection

A) refers to the private, self-interested actions that people pursue, which, when taken collectively, lead to a loss in economic surplus.
B) refers to the actions people take after they have entered into a transaction that make the other party to the transaction worse off.
C) refers to the situation in which one party to a transaction takes advantage of knowing more than the other party to the transaction.
D) refers to the actions people take before they enter into a transaction so as to mislead the other party to the transaction.