C18: Asymetric Info. Flashcards
1
Q
2 forms
A
Adverse Selection
Moral Hazard
2
Q
Adverse Selection
A
When 1 party to a transaction has private info of a feature that is unknow to the other parties of the transaction and takes economic advantage of it
3
Q
Moral hazard
A
When a more informed agent takes advantage of less informed
4
Q
FOCUS
A
Adverse selection
5
Q
Assumptions so far
A
Consumers know the value from consuming a particular good WTP
6
Q
Lemon problem
A
Libro
7
Q
Lemon problem caused
A
By assymetric info not by a lack of it.
