Exam 15: Asymmetric Information

If a firm can sell essentially the same product with the same quality under different brand names that have different perceived quality, the firm

Which of the following workers is most likely to be asked to post a performance bond?

If bad drivers can usually avoid being ticketed by the police, then insurance companies will

If an agent is risk averse and a principal is risk neutral, and if the agent pays the principal a fixed fee,

If information in the market for used motorcycles is symmetric and both buyers and sellers are equally ignorant, then

In the automobile insurance market, adverse selection occurs when

If the government provides universal health insurance, what screening process will the government need?

If a life insurance company does NOT require a medical exam of its policyholders, it is most likely that the company

A conflict between an owner and a manager may occur when

In a principal-agent relationship, moral hazard might occur if

Firms use hostages

A person practices poisonous snake charming and does not reveal this to her health insurance company before purchasing insurance. This is an example of

Adverse selection occurs when there is

To reduce adverse selection,

Firms that seek to avoid hiring lazy workers that assert they are hardworking are trying to avoid

Which of the following would NOT be used by firms to deter shirking?

In the presence of asymmetric information, a contingent contract

Which of the following is most likely to be a feature of a state-contingent contract?

If reckless drivers are more likely to buy automobile insurance than safe drivers are,

Opportunism may occur when