ENRICHMENT MODULE C

The Economics of Information

In this Module, you will learn to:

• Identify the special problems posed by information that some people have and other people do not, which is known as private information or asymmetric information

• Explain how information asymmetries can lead to the problem of adverse selection

• Discuss ways that firms can deal with imperfect information using screening and signaling

• Explain how information asymmetries can lead to the problem of moral hazard