Economics · Information Economics
In information economics, what is the key distinction between Moral Hazard and Adverse Selection?
Verified Solution4 OptionsUpdated: October 2026👁️1 View
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- 1Moral Hazard represents hidden information, whereas Adverse Selection represents hidden action
- 2Moral Hazard represents hidden action, whereas Adverse Selection represents hidden information✓
- 3Both concepts refer exclusively to hidden information
- 4Both concepts refer exclusively to hidden action
Correct answer
Moral Hazard represents hidden action, whereas Adverse Selection represents hidden information
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