Adverse Selection vs. Moral Hazard


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question 1 of 3

What do moral hazard and adverse selection have in common?

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1. When someone makes a decision without all of the information that leads to an undesirable result, they have just been involved in what?

2. When an individual partakes in risky behavior because they are protected, what have they been apart of?

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About This Quiz & Worksheet

Decision making can become complicated when one party has better or more information than the other. This quiz/worksheet combo will assess your understanding of what results when this happens. The questions will ask you to review scenarios and determine which result is being presented.

Quiz & Worksheet Goals

These assessments will test you on the following:

  • The common element of adverse selection and moral hazard
  • The term for making a decision without all the information
  • The term for risky behavior due to another bearing the risk

Skills Practiced

These assessments allow students to test their knowledge by using the following skills:

  • Problem solving - use acquired knowledge to analyze examples and determine the correct result of the decision
  • Interpreting information - verify that you can read and correctly interpret information regarding these two results of decision making
  • Distinguishing differences - compare and contrast adverse selection and moral hazard

Additional Learning

To learn more about adverse selection and moral hazard, review the accompanying lesson, Adverse Selection vs. Moral Hazard. The lesson covers the following objectives:

  • Review examples
  • Identify the common element
  • Contrast adverse selection and moral hazard