Asked by Nazwa Al-Sayeed on Jun 11, 2024

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Verified

People faced with adverse selection use _____ to deal with it.

A) screening
B) signals
C) reputation
D) screening,signals,and reputation

Screening

The process of evaluating or examining something to ascertain its condition or identify the presence of something.

Signals

Actions or indicators that convey information or intentions in various contexts, such as economics, where they can indicate future behavior or trends.

Reputation

A long-term standing in the public regard that serves to reassure others that private information is not being concealed; a valuable asset in the face of adverse selection.

  • Recognize methods employed to counteract the impacts of adverse selection and moral hazard.
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Verified Answer

BJ
Brooke JacksonJun 16, 2024
Final Answer :
D
Explanation :
People faced with adverse selection use a combination of screening, signals, and reputation to deal with it. Screening involves gathering information and conducting tests to screen out high-risk individuals. Signals are used by individuals to convey information about themselves to potential partners, such as education or job experience. Reputation refers to the established trustworthiness or reliability of an individual, institution or product. By using a combination of these strategies, individuals can mitigate the effects of adverse selection and reduce their risk of selecting a low-quality partner.