Aec 251 oregon state Study guides, Class notes & Summaries

Moral Hazard - ANSWER-the actions that are taken by one party but are relevant for and not observed by the other party in the transaction Moral Hazard Example - ANSWER-"If I can transfer risk and cost of my choices, I might make different choices" "People tend to take more risks if they don't have to bear the costs of their behaviors. Adverse Selection - ANSWER-the situation in which one party to a transaction takes advantage of knowing more than the other party to the transaction ...