Exam 12: Markets with Private Information

________ occurs when an informed person takes an action to send information to an uninformed person,and ________ occurs when an uninformed person creates an incentive for an informed person to reveal private information.

Suppose that there are only two types of used cars,peaches and lemons.Peaches are worth $10,000 and lemons are worth $4,000.Without effective signals such as warranties,the owners of peaches cannot sell their cars for $10,000 because the

Auto insurance companies charge a lower premium to drivers who carry a higher deductible because