Economics of Information Asymmetrical Information
Order ID 53563633773 Type Essay Writer Level Masters Style APA Sources/References 4 Perfect Number of Pages to Order 5-10 Pages Description/Paper Instructions
Economics of Information Asymmetrical InformationTopic: Economics of information
Give a couple of examples for cases with ‘asymmetric information’. What happens in markets with asymmetric information?
Asymmetric information is an interesting nonetheless not too uncommon situation that parties involved in a transaction do not have the same information regarding that trade. This has implications for such markets that we are seeking.
by Maysaa Al Mashaykhi Asymmetric information, also known as “information failure,” occurs when one party to an economic transaction possesses more excellent material knowledge than the other party (Bloomenthal,2021). That typically manifests when the seller of a good or service has more excellent knowledge than the buyer; however, the reverse dynamic is achievable. Almost all economic transactions involve information asymmetries. For example, Qualified doctors undertake years and years of medical education. In turn, their knowledge of healthcare matters is naturally superior to the average patient. Therefore, it is challenging for the customer to examine the diagnosis in an economic transaction. The specified treatment may cost $10,000, but there is no way of plausibly disputing this without medical knowledge. Although the internet has allowed people to understand their conditions better, there still exists a considerable gap in understanding between the two parties. Insurance is a classic example of adverse selection, which directs to asymmetrical information. When an insurer and a consumer agree, they have far more segments than the insurer. For example, a health insurer has no idea of the customer’s habits. Do they smoke a packet of cigarettes a day, or do they eat sufficient fruit and vegetables? Such elements may make the transaction more dangerous to the insurer, leading to a greater risk of a severe illness. The insurer may overcome such asymmetrical information by hiring a doctor to examine. That may allow it to obtain a more significant knowledge of how healthy the consumer is and price accordingly. However, what we may see is a mortal threat. Even if the insurer can obtain information symmetry (have the same information as the customer), the customer may become more reckless due to having insurance. That may not necessarily be the issue in health insurance but is more prominent in gadget insurance. For example, insured people may leave their laptops unattended while going to the lavatory. That increases the risk of it being stolen, a risk that the customer knows they don’t have to bear. Asymmetric information causes an imbalance of power. A lack of equal information causes economic imbalances that result in adverse selection and moral hazards. All of these economic weaknesses can lead to market failure (MasterClass staff, 2021). MasterClass staff. (November 2, 2021). Information Asymmetry Explained. https://www.masterclass.com/articles/information-a… Bloomenthal, A. (January 19, 2021). Asymmetric Information. https://www.investopedia.com/terms/a/asymmetricinf… by Mario Salge Mata First, let’s define what an asymmetrical information scenario is. This happens when one party possesses important information that the other party on the transaction lacks. Since the law of supply and demand is in charge of controlling the market, the asymmetrical information would always lead to market failure, according to Tarver (2020). This is also known as “information failure” (Bloomenthal, 2021) This typically manifests when the seller of a good or service possesses greater knowledge than the buyer; however, the reverse dynamic is also possible. In almost every transaction exists a certain degree of information failure. Examples of Information : The 2007–2008 subprime loan crisis was a classic example of how asymmetric information can skew a market and cause market failure. A homeowners wanted to sell their house; they would have more information about the house than the buyer. the second-hand car salesman. The salesman knows if there are any defects with the car such as faulty electrics, but the customer doesn’t. any situation involving a borrower and a lender when the borrower fails to disclose negative information about his or her real financial state. Or the borrower may simply fail to anticipate a worst-case scenario such as a job loss or an unanticipated expense. Asymmetric information is seen as the desired outcome of a healthy market economy in terms of skilled labor, where workers specialize in a trade, becoming more productive, and providing more excellent value to workers in other trades. One of the disadvantages of asymmetric information can result in people with the least information rationally refusing to participate in the market. Asymmetric information between consumers and the firm can affect firm profits. For example, suppose a firm invests in developing a new product that it knows to be superior to existing products in the market. Consumers, on the other hand, are unlikely to know whether the new product is truly superior to existing products or whether the firm is falsely claiming the product to be superior. (Baye (2017) References: Baye, M. R., & Prince, J. (2017). Managerial Economics and Business Strategy. McGraw-Hill Education. Bloomenthal, A. (2021, December 7). Asymmetric information. Investopedia. Retrieved December 13, 2021, from https://www.investopedia.com/terms/a/asymmetricinformation.asp. Tarver, E. (2021, September 13). How financial markets exhibit asymmetric information. Investopedia. Retrieved December 13, 2021, from https://www.investopedia.com/ask/answers/042915/ho…Offer at least two 200-300-word comments (replies) to posts from your peers’ discussions by Sunday 11:55 pm to earn a maximum of 8 points each
RUBRIC
QUALITY OF RESPONSE NO RESPONSE POOR / UNSATISFACTORY SATISFACTORY GOOD EXCELLENT Content (worth a maximum of 50% of the total points) Zero points: Student failed to submit the final paper. 20 points out of 50: The essay illustrates poor understanding of the relevant material by failing to address or incorrectly addressing the relevant content; failing to identify or inaccurately explaining/defining key concepts/ideas; ignoring or incorrectly explaining key points/claims and the reasoning behind them; and/or incorrectly or inappropriately using terminology; and elements of the response are lacking. 30 points out of 50: The essay illustrates a rudimentary understanding of the relevant material by mentioning but not full explaining the relevant content; identifying some of the key concepts/ideas though failing to fully or accurately explain many of them; using terminology, though sometimes inaccurately or inappropriately; and/or incorporating some key claims/points but failing to explain the reasoning behind them or doing so inaccurately. Elements of the required response may also be lacking. 40 points out of 50: The essay illustrates solid understanding of the relevant material by correctly addressing most of the relevant content; identifying and explaining most of the key concepts/ideas; using correct terminology; explaining the reasoning behind most of the key points/claims; and/or where necessary or useful, substantiating some points with accurate examples. The answer is complete. 50 points: The essay illustrates exemplary understanding of the relevant material by thoroughly and correctly addressing the relevant content; identifying and explaining all of the key concepts/ideas; using correct terminology explaining the reasoning behind key points/claims and substantiating, as necessary/useful, points with several accurate and illuminating examples. No aspects of the required answer are missing. Use of Sources (worth a maximum of 20% of the total points). Zero points: Student failed to include citations and/or references. Or the student failed to submit a final paper. 5 out 20 points: Sources are seldom cited to support statements and/or format of citations are not recognizable as APA 6th Edition format. There are major errors in the formation of the references and citations. And/or there is a major reliance on highly questionable. The Student fails to provide an adequate synthesis of research collected for the paper. 10 out 20 points: References to scholarly sources are occasionally given; many statements seem unsubstantiated. Frequent errors in APA 6th Edition format, leaving the reader confused about the source of the information. There are significant errors of the formation in the references and citations. And/or there is a significant use of highly questionable sources. 15 out 20 points: Credible Scholarly sources are used effectively support claims and are, for the most part, clear and fairly represented. APA 6th Edition is used with only a few minor errors. There are minor errors in reference and/or citations. And/or there is some use of questionable sources. 20 points: Credible scholarly sources are used to give compelling evidence to support claims and are clearly and fairly represented. APA 6th Edition format is used accurately and consistently. The student uses above the maximum required references in the development of the assignment. Grammar (worth maximum of 20% of total points) Zero points: Student failed to submit the final paper. 5 points out of 20: The paper does not communicate ideas/points clearly due to inappropriate use of terminology and vague language; thoughts and sentences are disjointed or incomprehensible; organization lacking; and/or numerous grammatical, spelling/punctuation errors 10 points out 20: The paper is often unclear and difficult to follow due to some inappropriate terminology and/or vague language; ideas may be fragmented, wandering and/or repetitive; poor organization; and/or some grammatical, spelling, punctuation errors 15 points out of 20: The paper is mostly clear as a result of appropriate use of terminology and minimal vagueness; no tangents and no repetition; fairly good organization; almost perfect grammar, spelling, punctuation, and word usage. 20 points: The paper is clear, concise, and a pleasure to read as a result of appropriate and precise use of terminology; total coherence of thoughts and presentation and logical organization; and the essay is error free. Structure of the Paper (worth 10% of total points) Zero points: Student failed to submit the final paper. 3 points out of 10: Student needs to develop better formatting skills. The paper omits significant structural elements required for and APA 6th edition paper. Formatting of the paper has major flaws. The paper does not conform to APA 6th edition requirements whatsoever. 5 points out of 10: Appearance of final paper demonstrates the student’s limited ability to format the paper. There are significant errors in formatting and/or the total omission of major components of an APA 6th edition paper. They can include the omission of the cover page, abstract, and page numbers. Additionally the page has major formatting issues with spacing or paragraph formation. Font size might not conform to size requirements. The student also significantly writes too large or too short of and paper 7 points out of 10: Research paper presents an above-average use of formatting skills. The paper has slight errors within the paper. This can include small errors or omissions with the cover page, abstract, page number, and headers. There could be also slight formatting issues with the document spacing or the font Additionally the paper might slightly exceed or undershoot the specific number of required written pages for the assignment. 10 points: Student provides a high-caliber, formatted paper. This includes an APA 6th edition cover page, abstract, page number, headers and is double spaced in 12’ Times Roman Font. Additionally, the paper conforms to the specific number of required written pages and neither goes over or under the specified length of the paper. GET THIS PROJECT NOW BY CLICKING ON THIS LINK TO PLACE THE ORDER
CLICK ON THE LINK HERE: https://www.perfectacademic.com/orders/ordernow
Also, you can place the order at www.collegepaper.us/orders/ordernow / www.phdwriters.us/orders/ordernow
Do You Have Any Other Essay/Assignment/Class Project/Homework Related to this? Click Here Now [CLICK ME]and Have It Done by Our PhD Qualified Writers!!