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Adverse selection occurs before the financial transaction takes place

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16y ago
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Q: Does adverse selection occur before or after a transaction?
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Explain the relevance of information asymmetries in the intermediation process?

Information asymmetries occur when one party in a transaction has more or better information than the other, leading to potential misalignment of interests or adverse selection issues in intermediation. Intermediaries help mitigate these asymmetries by gathering and screening information to make informed decisions. By bridging the gaps in information between parties, intermediaries improve market efficiency and reduce transaction costs.


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Does natural selection occur in the world today?

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