Describe an adverse selection problem a company is facing. What

 

  1. Describe an adverse selection problem a company is facing. What is the source of the asymmetric information? Who is the less informed party? What transactions are not being consummated as a result of the information? Could you (or do you) use signaling or screening to consummate these transactions? Offer your company some sound advice, complete with computations of the attendant profit consequences.
  2. Describe a decision that is centralized (or decentralized) in your company. How could you decentralize (or centralize) the decision? What would happen if it were decentralized (or centralized)? Compute the profit consequences of the change.

[Your post must be substantive and demonstrate insight gained from the course material. Postings must be in the student’s own words – do not provide quotes!] [Your initial post should be at least 450+ words and in APA format (including Times New Roman with font size 12 and double spaced). Post the actual body of your paper in the discussion thread then attach a Word version of the paper for APA review] 

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