Asked by Cassidy Fenton on Sep 24, 2024
Verified
Signaling is
A) actions by the informed party to reveal her true risks
B) actions by the informed party to conceal her true risks
C) actions by the uninformed party to uncover the true risks
D) actions by the uninformed party to conceal the true risks
Signaling
The action of sending a signal (often indirectly) to convey information or intentions in economics, particularly in markets where information is asymmetric.
Informed Party
An individual or entity possessing knowledge or information that gives them an advantage in transactions or decisions.
True Risks
The actual risks associated with an investment, activity, or decision, taking into account all factors and potential outcomes.
- Understand the theories behind signaling and screening mechanisms in assorted contexts.
- Separate and outline the disparities between signaling and screening mechanisms.
Verified Answer
MJ
Maria Jose Abisaad2 days ago
Final Answer :
A
Explanation :
Signaling refers to actions by the informed party to reveal their true risks, typically to the uninformed party. This can include actions such as getting a certification or providing references to show that they are trustworthy or skilled. By doing so, the informed party can overcome the problem of asymmetric information and make themselves more attractive to potential partners or customers.
Learning Objectives
- Understand the theories behind signaling and screening mechanisms in assorted contexts.
- Separate and outline the disparities between signaling and screening mechanisms.