Answer: Search frictions.

## Explanation This scenario describes **Search frictions**, which occur when: - Investors face difficulties locating counterparties who are willing and able to transact - There are insufficient market participants with adequate capital to complete trades - The search process itself creates transaction costs and delays **Other options explained**: - **Agency costs**: Relate to conflicts of interest between principals and agents - **Selection bias**: Refers to systematic errors in sample selection - **Market participation costs**: Include broader transaction costs like commissions and fees Search frictions specifically address the difficulty in finding suitable counterparties, which is a key aspect of market liquidity and can significantly impact trading efficiency and execution quality.

Author: LeetQuiz .