Adverse Selection & Signaling

Adverse Selection & Signaling

Order Description

intro:
what we will talk about
adverse selection and signaling
one party is less informed, but the actions taken, has a reaction to their lack of information, and they are going to end up with a problem, that they want to avoid

then talk about george ackerloff – neoclassical economist
his model
broad idea: is that in a setting where the projects needing funds for investment are heterogeneous in quality, potential investors may not know a priori much about the quality of an individual project… (Expected mean return from each project)
Used cars market excuse
use the lemon EXAMPLE
lemon model:
https://en.wikipedia.org/wiki/The_Market_for_Lemons
https://wikisum.com/w/Akerlof:_The_market_for_lemons

Private Information / Adverse Selection / Market Failure:
https://ocw.mit.edu/courses/economics/14-03-microeconomic-theory-and-public-policy-fall-2010/lecture-notes/MIT14_03F10_lec17.pdf
Adverse Selection
https://mit.econ.au.dk/vip_htm/akoch/ec3326_l2.pdf

IF quality is private – then you can sell finance, if your’e risk adverse.
Expected utility of what you put in the project, plus a little something
minus the risk premium (cuz you’re risk adverse)

talk about Michael Spence
& Joseph Stiglitz

https://www.uh.edu/~bsorense/Rothschild&Stiglitz.pdf

signaling
Signaling – suppose theres not enough risk aversion.
Asking the investor to carry good and bad projects.
Financing everything is pareto efficient then!

Good quality people are going to signal to the investor. If you commit your own money to the project in a sufficient quantity,

It would leave the low quality people projects worst off if they try to emulate themselves as the high quality people
Signaling succeeds, there will be tow market prices for projects

on signaling: https://www.ppge.ufrgs.br/giacomo/arquivos/ecop26/davis.pdf

signaling Joseph Stiglitz
https://www.princeton.edu/~erp/ERParchives/archivepdfs/M302.pdf
https://www.nber.org/papers/t0093

also talk about PRINCIPLE AGENT PROBLEM) A SYMMETRIC

**good source:
https://economics.mit.edu/files/552
https://en.wikipedia.org/wiki/Information_asymmetry (use wiki references when quoting resources)

connect all the theorists:
good source for that: https://online.sfsu.edu/mbar/ECON605/presentations/ASS1.pdf

Order a unique copy of this paper
(550 words)

Approximate price: $22

Basic features
  • Free title page and bibliography
  • Unlimited revisions
  • Plagiarism-free guarantee
  • Money-back guarantee
  • 24/7 support
On-demand options
  • Writer’s samples
  • Part-by-part delivery
  • Overnight delivery
  • Copies of used sources
  • Expert Proofreading
Paper format
  • 275 words per page
  • 12 pt Arial/Times New Roman
  • Double line spacing
  • Any citation style (APA, MLA, Chicago/Turabian, Harvard)

Our guarantees

Delivering a high-quality product at a reasonable price is not enough anymore.
That’s why we have developed 5 beneficial guarantees that will make your experience with our service enjoyable, easy, and safe.

Money-back guarantee

You have to be 100% sure of the quality of your product to give a money-back guarantee. This describes us perfectly. Make sure that this guarantee is totally transparent.

Read more

Zero-plagiarism guarantee

Each paper is composed from scratch, according to your instructions. It is then checked by our plagiarism-detection software. There is no gap where plagiarism could squeeze in.

Read more

Free-revision policy

Thanks to our free revisions, there is no way for you to be unsatisfied. We will work on your paper until you are completely happy with the result.

Read more

Privacy policy

Your email is safe, as we store it according to international data protection rules. Your bank details are secure, as we use only reliable payment systems.

Read more

Fair-cooperation guarantee

By sending us your money, you buy the service we provide. Check out our terms and conditions if you prefer business talks to be laid out in official language.

Read more

Calculate the price of your order

550 words
We'll send you the first draft for approval by September 11, 2018 at 10:52 AM
Total price:
$26
The price is based on these factors:
Academic level
Number of pages
Urgency

Order your paper today and save 10% with the discount code HDCOVID10