6. Economics of Information and Choice Uncertainty

Question 1

What is signaling?

Answer 1

Communication that convey infomation

Question 2

Who signals who?

Answer 2

Potential and Adversaries

Question 3

What are two properties of signaling?

Answer 3

SIgnals must be costly to fake
If adversaries use signals that convey favorable information about themselves others will be forced to reveal information even when it is considerably less favorable

Question 4

Costly to Fake Principle

Answer 4

For a signal to an adversary to be credible must be costly to fake

Question 5

What is the full disclosure principle?

Answer 5

individuals must disclose even unfavorable qualities about themselves lest their silence be taken to mean that they have something even worse to hide

Question 6

What is the expected value?

Answer 6

The sum of all possible outcomes weighted by its representative probability of occurance

Question 7

What is another aspect of expected value?

Answer 7

Including the gamble, people also consider how they feel about each of its outcomes

Question 8

What is the expected value equation?

Answer 8

EV= Pevent+Pevent+…