Question 1

Suppose research reveals that college graduates have higher employment rates and higher wages,but a significant proportion of college graduates who get jobs do so in fields other than the field in which they earned their degree.How could this be evidence of signaling? What is the counter-argument?

Accepted Answer

The answer of Suppose research reveals that college graduates have...

Question 2

George Akerloff theorized that adverse selection in the used car market could be so bad that the market completely unravels and no good used cars are offered for sale.But,of course,there probably are some good used cars offered for sale in real used car markets.What methods have developed in the used car market to overcome this problem of asymmetric information and to prevent market unraveling?

Accepted Answer

The answer of George Akerloff theorized that adverse selection in...

Question 3

Explain the differences and similarities between screening and signaling.Is one better than the other?

Accepted Answer

The answer of Explain the differences and similarities between screening...

Question 4

Give an example of the potential for moral hazard that exists in the following relationships: (a)a film actress and her agent; (b)a employee hired by a large firm to manage one retail location; and (c)a college student and a professor.

Accepted Answer

The answer of Give an example of the potential for...

Question 5

Explain in your own words how the government can create Pareto efficiency by mandating participation in a social health insurance program.

Accepted Answer

The answer of Explain in your own words how the...

Quiz 21: Asymmetric Information

Suppose research reveals that college graduates have higher employment rates and higher wages,but a significant proportion of college graduates who get jobs do so in fields other than the field in which they earned their degree.How could this be evidence of signaling? What is the counter-argument?

Explain the differences and similarities between screening and signaling.Is one better than the other?

Give an example of the potential for moral hazard that exists in the following relationships: (a)a film actress and her agent; (b)a employee hired by a large firm to manage one retail location; and (c)a college student and a professor.

Explain in your own words how the government can create Pareto efficiency by mandating participation in a social health insurance program.