When an agent attempts to reveal information to the principal, which of the following is occurring?
A)Signalling
B)Screening
C)Moral hazard
D)Asymmetric information

Question

​When an agent attempts to reveal information to the principal, which of the following is occurring?
A)​Signalling
B)​Screening
C)​Moral hazard
D)​Asymmetric information

Quizplus · Accepted Answer

Signalling is the act of the agent providing information to the principal in order to communicate their quality and build trust. This can include revealing information about their actions or decisions that wouldn't have been known through observation alone. Screening is the opposite, where the principal tries to gather information about the agent's quality to make a decision about whether to hire or work with them. Moral hazard and asymmetric information are related issues but not directly tied to the act of revealing information from agent to principal.

​When an Agent Attempts to Reveal Information to the Principal

When an Agent Attempts to Reveal Information to the Principal