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Author Question: Which of the following is an application of the adverse-selection problem? a. a customer driving ... (Read 76 times)

dmcintosh

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on: Jul 1, 2018
Which of the following is an application of the adverse-selection problem?
 a. a customer driving more recklessly after buying car insurance.
  b. a teenager hanging out with friends his or her parents do not approve of.
  c. shareholders offering a high-powered incentive contract to a manager.
  d. an auto repairman claiming that the repairs are more extensive than they actually are.

Question 2

The principal is distinct from the agent in the principal-agent model because
 a. the principal offers the contract to the agent.
  b. the principal is fully informed.
  c. both a and b.
  d. neither a nor b.


k2629

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Reply #1 on: Jul 1, 2018
Answer to Question 1

d

Answer to Question 2

a


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