- University of Maastricht
- Economics And International Business
- Economics And International Business 1001
- Managerial Economics
Last Modified: 2014-06-08
resources when agents involved have asymmetric information which results from some agents not being able to observe some characteristic of other agents or goods. Under adverse selection both sides of the market suffer economic losses.
- fixed fee rental contract
- hire contract, per unit pay
- contingent contract: share revenue or profit
- Bonding- agents are required to deposit funds guaranteeing their good behavior.
- Deferred payments- serve the same function as bonds.
- Efficiency wages- an unusually high wage that firms pay workers as an incentive to avoid shirking.
- Subjective probability
- Probability distribution
- Gambler's fallacy
- low-probability games
- certainty effect: allais effect
- framing- how a problem is formulated. less risk adverse when discussing gains and more adverse when it comes to making losses.
- Social pressure
- Laws that prevent opportunism
- consumer screening
- third-party comparisons
- standards & certifications
- Signaling by firms
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