Ch17_Pindyck.pptVIP

Chapter 17 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 Managerial Incentives in an Integrated Firm Asymmetric Information in Labor Markets: Efficiency Wage Theory Introduction We can see what happens when some parties know more than others – asymmetric information Frequently a seller or producer knows more about the quality of the product than the buyer does Managers know more about costs, competitive position and investment opportunities than firm owners Quality Un