Syllabus 2.10
Market Failure 2.10- Market Failure Key Terms:
1. market failure 2. welfare loss 3. asymmetric information 4. Adverse Secection 5. Moral Hazard VID 12: Moral Hazard 2
VID 11: Great Recession
VID 16: Japanese tourists overcharged
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VID 1: Welker on Asymmetric information
VID 2: Welker on Asymmetric information (Firm witholds information to workers)
VID 3: Stiglitz on Freefall; the Great Recession (2010)
VID 4: Market Failure: The Inside Job explains how financial markets failed in 2008 + the origins of the 'great recession'
VID 10: Adverse Selection + Insurance
VID 13: Rating Agencies not Rating effectively
VID 14: VW scandal Explained 1
VW 15: VW Scandal Explained 2
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VID 5: Asymmetric information: used car
VID 6: Asymmetric: Health Insurance
VID 7: Asymetric Information + Moral Hazard (1) (MRU)
VID 8: Moral Hazard (Turor2U)
VID 9: Difference between Asymetric Information + Moral Hazard
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2.10
Asymmetric information
This is where one party in an economic transaction has access to more or better information than the other party.
Adverse selection
This occurs when a buyer and seller do not have the same information, causing a transaction to take place based upon uneven terms.
Loss (economic)
Occurs when total costs of a firm are greater than total revenues. It is equal to total cost minus total revenue.
Moral hazard
This occurs when a party provides misleading information and changes behaviour after a transaction has taken place.
Perfect information
This exists where all stakeholders in an economic transaction have access to the same knowledge.
Screening
The use of a screening process to gain more information regarding a participant in a transaction, in order to reduce asymmetric information, and so reduce adverse selection.
Asymmetric information
This is where one party in an economic transaction has access to more or better information than the other party.
Adverse selection
This occurs when a buyer and seller do not have the same information, causing a transaction to take place based upon uneven terms.
Loss (economic)
Occurs when total costs of a firm are greater than total revenues. It is equal to total cost minus total revenue.
Moral hazard
This occurs when a party provides misleading information and changes behaviour after a transaction has taken place.
Perfect information
This exists where all stakeholders in an economic transaction have access to the same knowledge.
Screening
The use of a screening process to gain more information regarding a participant in a transaction, in order to reduce asymmetric information, and so reduce adverse selection.