微观经济学英文课件chapter_17Markets with Asymmetric Information.ppt

Chapter 1 Chapter 17 Markets with Asymmetric Information Topics to be Discussed Quality Uncertainty and the Market for Lemons Market Signaling Moral Hazard The Principal-Agent Problem Topics to be Discussed Managerial Incentives in an Integrated Firm Asymmetric Information in Labor Markets: Efficiency Wage Theory Introduction We will study how imperfect information influences resource allocation and the price system. Quality Uncertaintyand the Market for Lemons The lack of complete information when purchasing a used car increases the risk of the purchase and lowers the value of the car. Quality Uncertaintyand the Market for Lemons The Market for Used Cars Assume Buyers and sellers can distinguish between high and low quality cars There will be two markets The Lemons Problem Quality Uncertaintyand the Market for Lemons The Market for Used Cars With asymmetric information: Low quality goods drive high quality goods out of the market. The market has failed to produce mutually beneficial trade. Too many low and too few high quality cars are on the market. Adverse selection occurs; the only cars on the market will be low quality cars. Implications of Asymmetric Information Medical Insurance Question Is it possible for insurance companies to separate high and low risk policy holders? If not, only high risk people will purchase insurance. Adverse selection would make medical insurance unprofitable. Implications of Asymmetric Information Automobile Insurance Questions What impact does asymmetric information and adverse selection have on insurance rates and the delivery of automobile accident insurance? How can the government reduce the impact of adverse selection in the insurance industry? Implications of Asymmetric Information The Market for Credit Asymmetric information creates the potential that only high risk borrowers will seek loans. Question How can credit histories help make this market more efficient and reduce the cost of credit? Implications of Asymmetric Info