DTC contracts which prohibit buyers from inspecting diamonds in advance help to minimize:
A)the problem of moral hazard.
B)the cost of gathering duplicative information.
C)the problem of adverse selection.
D)the winner's curse.

Question

Quizplus · Accepted Answer

Prohibiting buyers from inspecting diamonds in advance reduces the need for each buyer to gather the same information, thus minimizing the cost of gathering duplicative information.

DTC Contracts Which Prohibit Buyers from Inspecting Diamonds in Advance