________: pattern in which insurance tends to be purchased disproportionately by those who are most costly for companies to insure.
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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.
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3
Lemons model
________: George Akerlofs explanation of how asymmetric information tends to reduce the average quality of goods offered for sale.
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political discourse
Disappearing ________: theory that people who support a position may remain silent because speaking out would create a risk of being misunderstood.
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fake principle
Costly- to- ________: to communicate information credibly to a potential rival, a signal must be costly or difficult to fake.
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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.
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neutral person
Risk- ________: someone who would accept any gamble that is fair or better.
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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
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Expected value of a gamble
sum of the possible out comes of the gamble multiplied by their respective probabilities
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Fair gamble
gamble whose expected value is zero
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Better-than-fair gamble
gamble whose expected value is positive
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Risk-neutral person
someone who would accept any gamble that is fair or better
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Risk-averse person
someone who would refuse any fair gamble
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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
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15
Lemons model
George Akerlofs explanation of how asymmetric information tends to reduce the average quality of goods offered for sale
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16
Costly-to-fake principle
to communicate information credibly to a potential rival, a signal must be costly or difficult to fake
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17
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
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18
Adverse selection
pattern in which insurance tends to be purchased disproportionately by those who are most costly for companies to insure
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19
Moral hazard
tendency of people to expend less effort protecting those goods that are insured against theft or damage
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20
Disappearing political discourse
theory that people who support a position may remain silent because speaking out would create a risk of being misunderstood
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21
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
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22
Expected value of a gamble
Sum of the possible out comes of the gamble multiplied by their respective probabilities
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23
Fair gamble
Gamble whose expected value is zero
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24
Better-than-fair gamble
Gamble whose expected value is positive
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25
Risk-neutral person
Someone who would accept any gamble that is fair or better
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26
Risk-averse person
Someone who would refuse any fair gamble
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27
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
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28
Lemons model
George Akerlof's explanation of how asymmetric information tends to reduce the average quality of goods offered for sale
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29
Costly-to-fake principle
To communicate information credibly to a potential rival, a signal must be costly or difficult to fake
New cards
30
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
New cards
31
Adverse selection
Pattern in which insurance tends to be purchased disproportionately by those who are most costly for companies to insure
New cards
32
Moral hazard
Tendency of people to expend less effort protecting those goods that are insured against theft or damage
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33
Disappearing political discourse
Theory that people who support a position may remain silent because speaking out would create a risk of being misunderstood
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Flashcard (25)