Asymmetric Information Flashcards
1
Q
In what ways can asymmetric information affect the functioning of a market?
A
Adverse selection
Signalling
Moral hazard
Incentives contracting
2
Q
Pooling equilibrium
A
Both types of products are traded and cannot be distinguished by the buyers
3
Q
Separating equilibrium
A
Only one of the two types of products is
traded, or both are traded but can be distinguished by the buyers
