Admati and Pfleiderer (1994) Argued That by Having Both Inside

question 3

Multiple Choice

Admati and Pfleiderer (1994) argued that by having both inside and outside investors contribute to a venture, ____________, and thus a rational continuation/termination decision would be made at each stage of development.

• A)both information asymmetry and principal-agent problems are resolved
• B)taxes and risk are both minimized
• C)the overinvestment and underinvestment problems are balanced out
• D)perception biases cancel out

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Definitions:

Explicit Memories

Memories which can be intentionally remembered, including information and happenings.

Implicit Memories

Memories that are not consciously recalled but influence behaviors and skills, such as riding a bicycle or tying shoelaces.

Rehearsal

The cognitive process of repetitively thinking about or practicing an information to aid in its retention and retrieval.

Recall

The act of retrieving information or events from the past in the absence of external cues, often measured in psychological tests.