Which of the following is an attempt to reduce the problem of asymmetric information?
A)When someone is applying for a job, the employer checks references to determine the previous work habits of the applicant.
B)An insurance company requires people who want to purchase life insurance to take a physical exam.
C)When someone is considering buying a used car from a dealership, the potential buyer requests documentation of the repair history of the car.
D)All of the above are correct.

Question

Quizplus · Accepted Answer

All of the given choices are examples of attempts to reduce the problem of asymmetric information. In option A, the employer is trying to gather information about the applicant's work habits to reduce the information gap between them. In option B, the insurance company is trying to gather information about the health condition of the individual to reduce the information gap between them. In option C, the potential buyer is trying to gather information about the repair history of the used car to reduce the information gap between them and the dealer.

Which of the Following Is an Attempt to Reduce the Problem