Multiple Choice
In a market transaction characterized by asymmetric information, who is most likely to benefit from possessing confidential information?
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17. Asymmetric Information, Voting, and Public Choice
Asymmetric Information: Adverse Selection and Moral Hazard
Multiple Choice
Why might healthcare markets experience information problems?
A
Because government price controls force providers to hide true quality and pricing information from consumers.
B
Because healthcare is a public good, so markets cannot provide information about quality or prices.
C
Because patients, providers, and insurers have unequal information about patients’ health, treatment quality, and future risks, leading to adverse selection and moral hazard.
D
Because medical services are highly standardized and easy to compare, which overwhelms consumers with too much comparable information.
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