Aec 251 oregon state - Study guides, Class notes & Summaries
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AEC 251 Oregon State University Exam with Complete Solutions
- Exam (elaborations) • 6 pages • 2023
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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 
 
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