Question

w e l l on the role of financial intermediaries and bank management. Offer an example of adverse selection or moral hazard in markets. Consider insurance, employment, banking and other areas. Week 2: Give an example of an asymmetric information problem that you believe requires or does NOT require government intervention Explain your selection! Week 3: Choose one of your classmate's examples from week 1 or 2. Discuss how to heet enth-

please answer week 2 question

Answer 1

Answer:

2) Asymmetric information states that the knowledge of an economics transaction is one party more and other party, i.e. information about an economic transaction/event are not equally know by both the party. The example of asymmetric information is health insurance, when a people buy a health insurance policy, insurance agent does not know the physical condition of customer better than customer, this create asymmetric information and this kind of problem govt. do not require to intervention because insurance company set a guideline for its customers to control this. For example, when you buy a health insurance that time you must submit report of some medical test.