Signals May Prevent Adverse Selection If

question 77

Multiple Choice

Signals may prevent adverse selection if

• A) sending a false signal is cheap for the agent.
• B) sending a false signal is costly for the agent.
• C) agents as rational.
• D) signals are as good as cheap talk.

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Definitions:

Safe Passage

The right or permission to traverse a specific area or domain without harm or obstruction.

Breach of Contract

A violation of any of the agreed-upon terms and conditions of a binding contract, which may result in legal action or damages.

Injured Party

An injured party is a person or entity that has suffered harm, loss, or injury, either physically or in a more abstract sense, such as financially, and may be entitled to compensation or redress.

Remedy

A legal solution or compensation awarded to an aggrieved party in a judicial proceeding.