Buyers and sellers facing asymmetric information:
A) are not able to solve the problem of asymmetric information.
B) have no reason to solve the problem of asymmetric information.
C) have an incentive to solve the problem of asymmetric information.
D) do not bear the results of asymmetric information.

Question

Quizplus · Accepted Answer

Buyers and sellers facing asymmetric information have an incentive to solve the problem of asymmetric information. Without addressing the information asymmetry, the transaction may not be completed or may result in one party benefiting at the expense of the other. Therefore, both buyers and sellers have an incentive to find ways to reduce information asymmetry and increase the efficiency of the market.

Buyers and Sellers Facing Asymmetric Information