In the used car market, adverse selection can be limited by
A) offering warranties.
B) establishing loan limits.
C) requiring high deductibles.
D) requiring low deductibles.

Question

Quizplus · Accepted Answer

Offering warranties can help limit adverse selection by providing assurance to buyers about the quality of the car, thus reducing the information asymmetry between buyers and sellers.

In the Used Car Market, Adverse Selection Can Be Limited