Chapter 11 - The economics of information
0.0(0)
Studied by 1 person
View linked note
Learn
Practice Test
Spaced Repetition
Match
FlashcardsCard Sorting
1/32
Study Analytics
Name | Mastery | Learn | Test | Matching | Spaced |
|---|
No study sessions yet.
33 Terms
1
New cards
Adverse selection
________: pattern in which insurance tends to be purchased disproportionately by those who are most costly for companies to insure.
2
New cards
Statistical discrimination
________: practice of making judgments about the quality of people, goods, or services based on the characteristics of the groups to which they belong.
3
New cards
Lemons model
________: George Akerlofs explanation of how asymmetric information tends to reduce the average quality of goods offered for sale.
4
New cards
political discourse
Disappearing ________: theory that people who support a position may remain silent because speaking out would create a risk of being misunderstood.
5
New cards
fake principle
Costly- to- ________: to communicate information credibly to a potential rival, a signal must be costly or difficult to fake.
6
New cards
Asymmetric information
________: situations in which buyers and sellers are not equally well informed about the characteristics of goods and services for sale in the marketplace.
7
New cards
neutral person
Risk- ________: someone who would accept any gamble that is fair or better.
8
New cards
Free-rider problem
incentive problem in which too little of a good or service is produced because non-payers cannot be excluded from using it
9
New cards
Expected value of a gamble
sum of the possible out comes of the gamble multiplied by their respective probabilities
10
New cards
Fair gamble
gamble whose expected value is zero
11
New cards
Better-than-fair gamble
gamble whose expected value is positive
12
New cards
Risk-neutral person
someone who would accept any gamble that is fair or better
13
New cards
Risk-averse person
someone who would refuse any fair gamble
14
New cards
Asymmetric information
situations in which buyers and sellers are not equally well informed about the characteristics of goods and services for sale in the marketplace
15
New cards
Lemons model
George Akerlofs explanation of how asymmetric information tends to reduce the average quality of goods offered for sale
16
New cards
Costly-to-fake principle
to communicate information credibly to a potential rival, a signal must be costly or difficult to fake
17
New cards
Statistical discrimination
practice of making judgments about the quality of people, goods, or services based on the characteristics of the groups to which they belong
18
New cards
Adverse selection
pattern in which insurance tends to be purchased disproportionately by those who are most costly for companies to insure
19
New cards
Moral hazard
tendency of people to expend less effort protecting those goods that are insured against theft or damage
20
New cards
Disappearing political discourse
theory that people who support a position may remain silent because speaking out would create a risk of being misunderstood
21
New cards
Free-rider problem
Incentive in problem in which too little of a good or service is produced because non-payers cannot be excluded from using it
22
New cards
Expected value of a gamble
Sum of the possible out comes of the gamble multiplied by their respective probabilities
23
New cards
Fair gamble
Gamble whose expected value is zero
24
New cards
Better-than-fair gamble
Gamble whose expected value is positive
25
New cards
Risk-neutral person
Someone who would accept any gamble that is fair or better
26
New cards
Risk-averse person
Someone who would refuse any fair gamble
27
New cards
Asymmetric information
Situations in which buyers and sellers are not equally well informed about the characteristics of goods and services for sale in the marketplace
28
New cards
Lemons model
George Akerlof's explanation of how asymmetric information tends to reduce the average quality of goods offered for sale
29
New cards
Costly-to-fake principle
To communicate information credibly to a potential rival, a signal must be costly or difficult to fake
30
New cards
Statistical discrimination
Practice of making judgments about the quality of people, goods, or services based on the characteristics of the groups to which they belong
31
New cards
Adverse selection
Pattern in which insurance tends to be purchased disproportionately by those who are most costly for companies to insure
32
New cards
Moral hazard
Tendency of people to expend less effort protecting those goods that are insured against theft or damage
33
New cards
Disappearing political discourse
Theory that people who support a position may remain silent because speaking out would create a risk of being misunderstood