Answer
Opportunistic behavior can be described as a behavior in which individuals or entities take advantage of opportunities that arise in situations where they can benefit themselves, while potentially harming others. There are two main types of opportunistic behavior: ex ante and ex post.
Ex ante opportunism is characterized by a lack of disclosure of information by one or both parties involved in a transaction. This occurs when an agent is unable to assess full information about the other agent. As a result, one party may try to manipulate the situation to their advantage by withholding information, misrepresenting information, or exploiting the information asymmetry between them and the other party.
Ex post opportunism, on the other hand, occurs when an agent engages in self-interested behavior to the detriment of another, knowing that they will not bear the full consequences of their actions. In other words, an agent takes advantage of a situation after the transaction has already occurred, rather than manipulating the situation beforehand. This can include actions such as reneging on an agreement, shirking responsibilities, or engaging in unethical behavior.
Both types of opportunistic behavior can have significant negative consequences for the other party involved in the transaction, and can lead to mistrust and breakdown of relationships between agents. Understanding and addressing these types of behaviors is important in maintaining ethical and productive business relationships.
Explanation
Ex ante is also called adverse selection. When in a transactional deal, if one agent possesses information that is not available to the other agent, and which gives them an advantage in bargaining and dealing, this is described as adverse selection. Ex post is also called moral hazard and is most common in insurance deals whereby an individual engages in risky behavior because they know the risk will be covered by another party.
