Which of the following is a method used to overcome the problem of asymmetric information?
A) Creating an informal organizational structure
B) Pooling risks
C) Self-selection
D) Signaling
E) Outsourcing

Question

Quizplus · Accepted Answer

Signaling is a method used to overcome the problem of asymmetric information. Signaling refers to actions taken by a party with more information to reveal some of that information to another party. By doing so, the party with more information can signal their credibility and reduce the information asymmetry. Examples of signaling include obtaining certifications, providing warranties or guarantees, and making large investments.

Which of the Following Is a Method Used to Overcome