Chapter 11 - The economics of information

________: pattern in which insurance tends to be purchased disproportionately by those who are most costly for companies to insure.

________: practice of making judgments about the quality of people, goods, or services based on the characteristics of the groups to which they belong.

________: George Akerlofs explanation of how asymmetric information tends to reduce the average quality of goods offered for sale.

Disappearing ________: theory that people who support a position may remain silent because speaking out would create a risk of being misunderstood.

Costly- to- ________: to communicate information credibly to a potential rival, a signal must be costly or difficult to fake.

________: situations in which buyers and sellers are not equally well informed about the characteristics of goods and services for sale in the marketplace.

Risk- ________: someone who would accept any gamble that is fair or better.

incentive problem in which too little of a good or service is produced because non-payers cannot be excluded from using it

sum of the possible out comes of the gamble multiplied by their respective probabilities

gamble whose expected value is zero

gamble whose expected value is positive

someone who would accept any gamble that is fair or better

someone who would refuse any fair gamble

situations in which buyers and sellers are not equally well informed about the characteristics of goods and services for sale in the marketplace

George Akerlofs explanation of how asymmetric information tends to reduce the average quality of goods offered for sale

to communicate information credibly to a potential rival, a signal must be costly or difficult to fake

practice of making judgments about the quality of people, goods, or services based on the characteristics of the groups to which they belong

pattern in which insurance tends to be purchased disproportionately by those who are most costly for companies to insure

tendency of people to expend less effort protecting those goods that are insured against theft or damage

theory that people who support a position may remain silent because speaking out would create a risk of being misunderstood

Incentive in problem in which too little of a good or service is produced because non-payers cannot be excluded from using it

Sum of the possible out comes of the gamble multiplied by their respective probabilities

Gamble whose expected value is zero

Gamble whose expected value is positive

Someone who would accept any gamble that is fair or better

Someone who would refuse any fair gamble

Situations in which buyers and sellers are not equally well informed about the characteristics of goods and services for sale in the marketplace

George Akerlof's explanation of how asymmetric information tends to reduce the average quality of goods offered for sale

To communicate information credibly to a potential rival, a signal must be costly or difficult to fake

Practice of making judgments about the quality of people, goods, or services based on the characteristics of the groups to which they belong

Pattern in which insurance tends to be purchased disproportionately by those who are most costly for companies to insure

Tendency of people to expend less effort protecting those goods that are insured against theft or damage

Theory that people who support a position may remain silent because speaking out would create a risk of being misunderstood