Information Failure Flashcards
1
Q
Asymmetric information
A
A situation in which some participants in a market have better information about market conditions than others.
2
Q
Moral hazard
A
A situation in which a person who had taken out insurance is prone to taking more risk.
3
Q
Adverse selection
A
A situation in which a person at risk is more likely to take out insurance.
4
Q
Define information failure
A
Where consumers lack the full information about the costs and / or benefits of a good and therefore, make choices that fail to achieve allocative efficiency.
