Recall the Application about the free-agent market for professional baseball pitchers to answer the following question(s).
-Recall the Application. The market for baseball pitchers suffers from an asymmetric information problem because
A) the pitcher's current team has superior information concerning the health of the pitcher.
B) the potential new teams have superior information concerning the health of the pitcher.
C) baseball teams never sign injury-prone pitchers.
D) a physical exam ensures that both the player's current team and potential new teams have the same information concerning the player's health.

Question

Quizplus · Accepted Answer

The current team has more information about the pitcher's health than potential new teams. This is because they have access to the player's medical history and can monitor their current condition firsthand. This information asymmetry can lead to difficulties in accurately valuing a player and negotiating a contract.

Recall the Application About the Free-Agent Market for Professional Baseball