Author Question: Signals can help prevent adverse selection as long as a false signal is costly to the person sending ... (Read 60 times)

wrbasek0 · **on:** Jul 1, 2018

Signals can help prevent adverse selection as long as a false signal is costly to the person sending it.

What will be an ideal response?

Question 2

Screening is the action

A) taken by an informed person to determine the information possessed by uninformed people.
B) taken by an uninformed person to determine the information possessed by informed people.
C) taken to offset signaling.
D) that is cheaper and more effective than cheap talk.

Chocorrol77 · **Reply #1 on:** Jul 1, 2018

Answer to Question 1

True. If false signals can be made at little cost to the perpetrator, the signals are meaningless. Signals are believed only when they are credible.

Answer to Question 2

B