Asymmetric Info Flashcards
1
Q
Incentive-compatible
A
Contract that gets the agent to make intended choice
2
Q
Adverse selection problem
A
Worst agent typos are the ones most eager to transact with the principal
3
Q
Asymmetric info problems
A
Particularly severe with contracts like warranties and insurance
4
Q
What helps the monopolist solve moral hazard problems
A
Having consumers compete in auctions
5
Q
Who makes the first mov in a signalling game
A
The player with private info about its type makes the 1st move
6
Q
Moral hazard
A
The best hidden action for the agent may not be good for the principal
