Asymmetric Information: Adverse Selection and Moral Hazard

17. Asymmetric Information, Voting, and Public Choice / Asymmetric Information: Adverse Selection and Moral Hazard / Problem 6

Problem 6

What is moral hazard?

A situation where parties have equal information.

A situation where no party has any information.

A situation where information is irrelevant to the transaction.

A situation where a party changes behavior after a contract is made.