Asked by Micah Awisus on Jun 12, 2024
Verified
eBay and Amazon provide "sellers' ratings" information based on the experiences of past buyers. This is to help resolve the adverse selection problem faced by potential buyers.
Adverse Selection
A market process in which undesired results occur due to information asymmetry between buyers and sellers, where one party has more or better information than the other.
Sellers' Ratings
Evaluations or scores given to sellers based on their performance, product quality, and customer service, often found on e-commerce platforms.
- Recognize the mechanisms used by markets to mitigate adverse selection and information asymmetry.
Verified Answer
JP
Jennifer PosadaJun 17, 2024
Final Answer :
True
Explanation :
eBay and Amazon both provide sellers' ratings to help potential buyers make informed decisions and reduce the adverse selection problem.
Learning Objectives
- Recognize the mechanisms used by markets to mitigate adverse selection and information asymmetry.
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