Match each of the terms on the left with its definition on the right. Click on the term first and then click on the matching definition. As you match them correctly they will move to the bottom of the activity.
asymmetric information principal–agent problem moral hazard free rider adverse selection credible signal | someone who consumes a public good without paying a share of the costs. When one party to an exchange has more or better information than the other party. promise is one that the promisor has an incentive to keep. How can a principal incentivize an agent to work in the principal’s interest even when the agent has information that the principal does not? An expensive action that is taken to reveal information. When an agent tries to exploit an information advantage in a dishonest or undesirable way. When an offer conveys negative information about the product being offered. |