Self-Check Questions


For each of the following purchases, say whether you would expect the degree of imperfect information to be relatively high or relatively low.

  1. buying apples at a roadside stand
  2. buying dinner at the neighborhood restaurant around the corner
  3. buying a used laptop computer at a garage sale
  4. ordering flowers over the internet for your friend in a different city

Why is there asymmetric information in the labor market? What signals can an employer look for that might indicate the traits they are seeking in a new employee?


Why is it difficult to measure health outcomes?