Some sellers of used cars provide warranties to buyers, with the aim of reassuring buyers that the car is of good quality. These warranties help reduce the chance of what occurring?

Question

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Warranties help reduce the chance of adverse selection, where buyers may assume that the seller is trying to sell a low-quality car and only those with issues will be sold. This reduces the risk to the buyer and increases the likelihood of a fair transaction.

Some Sellers of Used Cars Provide Warranties to Buyers, with the Aim