ECO 316 ECO316 WEEK 3 ASSIGNMENT ASYMMETRIC INFORMATION - ASHFORD
Ashford ECO 316 Week 3 Assignment Asymmetric Information [WLOs: 1] [CLOs: 4]
Asymmetric Information [WLOs: 1] [CLOs: 4]. Due by Day 7. Asymmetric information is the situation in which one party to an economic/financial transaction has better information than the other party, whichresults in two problems: adverse selection and moral hazard. Prior to beginning work on this assignment, read Hubbard and O’Brien’s Chapter 9 and respond to the following components.
• · Select a financial institution or market and discuss the causes of asymmetric information.
• · Describe real-world examples of adverse selection and moral hazard problems for your institution/intermediary or market.
o · Evaluate the impacts of adverse selection and moral hazard problems on your financial institution/intermediary or market.
o · A principal-agent problem is a moral hazard problem between managers and shareholders. Discuss a principal-agent problem in your financial institution/intermediary or market.
o · Analyze whether your financial institution/intermediary or market can reduce the adverse selection and/or moral hazard problems.
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