微观经济学讲义PPT12.ppt

San Francisco Apartment Search The first apartment you visit is the $400 version Look at the next apartment if the gamble is at least fair Two outcomes to the gamble You find a lower-priced apartment and your net benefit is $34 with 20% probability You find another $400 apartment and your net benefit is – $6 with 80% probability Expected value of the gamble is (34) (0.20) + (– 6) (0.80) = $2 Keep searching Commitment Problems and Search Some searches are for circumstances requiring commitment over some period of time Leasing an apartment Taking a job Getting married Search is costly and therefore limited People end their searches when the marginal cost of searching exceeds the marginal benefit BUT… what if you fall into a better option? Commitment Problems and Search If information were freely available, there would be no commitment problem Contracts are used to bind parties together AND Contracts carry penalties for breaking the arrangement People terminate their search because information gathering is costly Under some circumstances, one party may rationally choose to terminate the agreement and pay the penalties Asymmetric Information Asymmetric information occurs when either the buyer or seller Is better informed about the goods in the market Mutually beneficial trades may not occur A seller might know thata murder was committed in a house offered for sale Buyer does not know Private Sale of a Used Car Janes Miata is in excellent condition Janes reservation price is $10,000 Blue Book value is $8,000 Tom wants to buy a Miata His reservation price is $13,000 for one in excellent condition and $9,000 for one in average condition Determining the condition of Janes car has a cost and the results are uncertain Tom cannot verify that Janes Miata is superior Tom buys another Miata for $8,000; Janes is unsold Surplus Loss and Asymmetric Information Toms loss is $1,000 Pays $8,000 and has a gain of $1,000 Tom’s loss from buying an average car instead of Janes $13,00