Nicole wants to avoid buying a car that is a lemon. She takes a car she would like to buy to her mechanic before she purchases it. This is known as ?
C. moral hazard
D. adverse selection…
Jamil’s friend dies of a sudden heart attack. Jamil rushes to his doctor for an expensive physical examination. This response demonstrates that ?
A. People give too much weight to a small number of vivid observations
In the ultimatum game, what split would be rational for both the person proposing the split and the person who must accept or reject the split ?
A. There is no rational solution
B. 75/25C. 99/1
Which of the following is true under pairwise majority rule if people vote for the outcome closest to their most preferred outcome ?
A. The average preferred outcome wins
B. There is no clear winner due to Arrow’s Impossibility…
Which of the following is not a method firms use to avoid the moral hazard problem in the employment relationship ?
A. They pay employees with delayed compensation such as a year-end bonusB. They buy life insurance on their workers…
Which of the following is an example of a signal that is used to reveal private information ?
A. Enzo carefully chooses a special gift for Josephine
B. Josephine earns her MBA from the Harvard Business School
C. Lexus advertises…