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Adverse Selection
In economics, insurance, and risk management, adverse selection is a market situation where buyers and sellers have different information. The result is that participants with key information might participate selectively in trades at the expense of other parties who do not have the same information. In an ideal world, buyers should pay a price which reflects their willingness to pay and the value to them of the product or service, and sellers should sell at a price which reflects the quality of their goods and services. For example, a poor quality product should be inexpensive and a high quality product should have a high price. However, when one party holds information that the other party does not have, they have the opportunity to damage the other party by maximising self-utility, concealing relevant information, and perhaps even lying. Taking advantage of undisclosed information in an economic contract or trade of possession is known as adverse selection. This opportunity ... [...More Info...] [...Related Items...] OR: [Wikipedia] [Google] [Baidu] |
Economics
Economics () is the social science that studies the production, distribution, and consumption of goods and services. Economics focuses on the behaviour and interactions of economic agents and how economies work. Microeconomics analyzes what's viewed as basic elements in the economy, including individual agents and markets, their interactions, and the outcomes of interactions. Individual agents may include, for example, households, firms, buyers, and sellers. Macroeconomics analyzes the economy as a system where production, consumption, saving, and investment interact, and factors affecting it: employment of the resources of labour, capital, and land, currency inflation, economic growth, and public policies that have impact on these elements. Other broad distinctions within economics include those between positive economics, describing "what is", and normative economics, advocating "what ought to be"; between economic theory and applied economics; between rational a ... [...More Info...] [...Related Items...] OR: [Wikipedia] [Google] [Baidu] |
Quarterly Journal Of Economics
''The Quarterly Journal of Economics'' is a peer-reviewed academic journal published by the Oxford University Press for the Harvard University Department of Economics. Its current editors-in-chief are Robert J. Barro, Lawrence F. Katz, Nathan Nunn, Andrei Shleifer, and Stefanie Stantcheva. History It is the oldest professional journal of economics in the English language, and covers all aspects of the field—from the journal's traditional emphasis on micro-theory to both empirical and theoretical macroeconomics. Reception According to the ''Journal Citation Reports'', the journal has a 2015 impact factor of 6.662, ranking it first out of 347 journals in the category "Economics". It is generally regarded as one of the top 5 journals in economics, together with the American Economic Review, Econometrica, the Journal of Political Economy, and the Review of Economic Studies. Notable papers Some of the most influential and well-read papers in economics have been published ... [...More Info...] [...Related Items...] OR: [Wikipedia] [Google] [Baidu] |
Agency Cost
An agency cost is an economic concept that refers to the costs associated with the relationship between a " principal" (an organization, person or group of persons), and an "agent". The agent is given powers to make decisions on behalf of the principal. However, the two parties may have different incentives and the agent generally has more information. The principal cannot directly ensure that its agent is always acting in its (the principal's) best interests.''Pay Without Performance'' by Lucian Bebchuk and Jesse Fried, Harvard University Press 2004preface and introduction This potential divergence in interests is what gives rise to agency costs. Common examples of this cost include that borne by shareholders (the principal), when corporate management (the agent) buys other companies to expand its power, or spends money on wasteful and unnecessary projects, instead of maximizing the value of the corporation's worth; or by the voters of a politician's district (the principal) when ... [...More Info...] [...Related Items...] OR: [Wikipedia] [Google] [Baidu] |
Capital Market
A capital market is a financial market in which long-term debt (over a year) or equity-backed securities are bought and sold, in contrast to a money market where short-term debt is bought and sold. Capital markets channel the wealth of savers to those who can put it to long-term productive use, such as companies or governments making long-term investments. Financial regulators like Securities and Exchange Board of India (SEBI), Bank of England (BoE) and the U.S. Securities and Exchange Commission (SEC) oversee capital markets to protect investors against fraud, among other duties. Transactions on capital markets are generally managed by entities within the financial sector or the treasury departments of governments and corporations, but some can be accessed directly by the public. As an example, in the United States, any American citizen with an internet connection can create an account with TreasuryDirect and use it to buy bonds in the primary market, though sales to indiv ... [...More Info...] [...Related Items...] OR: [Wikipedia] [Google] [Baidu] |
Screening Games
A screening game is a two-player principal–agent type game used in economic and game theoretical modeling. Principal–agent problems are situations where there are two players whose interests are not necessarily matching with each other, and where complete honesty is not optimal for one player. This will lead to strategies where the players exchange information based in their actions which is to some degree noisy. This ambiguity prevents the other player from taking advantage of the first. The game is closely related to signaling games, but there is a difference in how information is exchanged. In the principal-agent model, for instance, there is an employer (the principal) and a worker (the agent). The worker has a given skill level, and chooses the amount of effort he will exert. If the worker knows his ability (which is given at the outset, perhaps by nature), and can acquire credentials or somehow signal that ability to the employer before being offered a wage, then the ... [...More Info...] [...Related Items...] OR: [Wikipedia] [Google] [Baidu] |
Reputation System
Reputation systems are programs or algorithms that allow users to rate each other in online communities in order to build trust through reputation. Some common uses of these systems can be found on E-commerce websites such as eBay, Amazon.com, and Etsy as well as online advice communities such as Stack Exchange. These reputation systems represent a significant trend in "decision support for Internet mediated service provisions". With the popularity of online communities for shopping, advice, and exchange of other important information, reputation systems are becoming vitally important to the online experience. The idea of reputation systems is that even if the consumer can't physically try a product or service, or see the person providing information, that they can be confident in the outcome of the exchange through trust built by recommender systems. Collaborative filtering, used most commonly in recommender systems, are related to reputation systems in that they both collect r ... [...More Info...] [...Related Items...] OR: [Wikipedia] [Google] [Baidu] |
Information Asymmetry
In contract theory and economics, information asymmetry deals with the study of decisions in transactions where one party has more or better information than the other. Information asymmetry creates an imbalance of power in transactions, which can sometimes cause the transactions to be inefficient, causing market failure in the worst case. Examples of this problem are adverse selection, moral hazard, and monopolies of knowledge. A common way to visualise information asymmetry is with a scale with one side being the seller and the other the buyer. When the seller has more or better information the transaction will more likely occur in the seller's favour ("the balance of power has shifted to the seller"). An example of this could be when a used car is sold, the seller is likely to have a much better understanding of the car's condition and hence its market value than the buyer, who can only estimate the market value based on the information provided by the seller and their own a ... [...More Info...] [...Related Items...] OR: [Wikipedia] [Google] [Baidu] |
Credence Good
Economists and marketers use of the Search, Experience, Credence (SEC) classification of goods and services, which is based on the ease or difficulty with which consumers can evaluate or obtain information. These days most economics and marketers treat the three classes of goods as a continuum. Archetypal goods are: *Search goods: those with attributes that can be evaluated prior to purchase or consumption. Consumers rely on prior experience, direct product inspection and other information search activities to locate information that assists in the evaluation process. Most products fall into the search goods category (e.g. clothing, office stationery, home furnishings). *Experience goods: those that can be accurately evaluated only after the product has been purchased and experienced. Many personal services fall into this category (e.g. restaurant, hairdresser, beauty salon, theme park, travel, holiday). *Credence goods: those that are difficult or impossible to evaluate even after co ... [...More Info...] [...Related Items...] OR: [Wikipedia] [Google] [Baidu] |
Personal Loan
Personal may refer to: Aspects of persons' respective individualities * Privacy * Personality * Personal, personal advertisement, variety of classified advertisement used to find romance or friendship Companies * Personal, Inc., a Washington, D.C.-based tech startup * The Personal, a Canadian-based group car insurance and home insurance company * Telecom Personal, a mobile phone company in Argentina and Paraguay Music * ''Personal'' (album), the debut album by R&B group Men of Vizion * ''Personal'', the first album from singer-songwriter Quique González, and the title song * "Personal" (Aya Ueto song), a 2003 song by Aya Ueto from ''Message'' * "Personal" (Hrvy song), a song from ''Talk to Ya'' * "Personal" (The Vamps song), a song from ''Night & Day'' *"Personal", a song by Kehlani from ''SweetSexySavage'' Books * ''Personal'' (novel), a 2014 novel by Lee Child See also * The Personals (other) * Person * Personality psychology * Personalization * Human sca ... [...More Info...] [...Related Items...] OR: [Wikipedia] [Google] [Baidu] |
Myerson–Satterthwaite Theorem
The Myerson–Satterthwaite theorem is an important result in mechanism design and the economics of asymmetric information, and named for Roger Myerson and Mark Satterthwaite. Informally, the result says that there is no efficient way for two parties to trade a good when they each have secret and probabilistically varying valuations for it, without the risk of forcing one party to trade at a loss. The Myerson–Satterthwaite theorem is among the most remarkable and universally applicable negative results in economics—a kind of negative mirror to the fundamental theorems of welfare economics. It is, however, much less famous than those results or Arrow's earlier result on the impossibility of satisfactory electoral systems. Notation There are two agents: Sally (the seller) and Bob (the buyer). Sally holds an item that is valuable for both her and Bob. Each agent values the item differently: Bob values it as v_B and Sally as v_S. Each agent knows his/her own valuation with ... [...More Info...] [...Related Items...] OR: [Wikipedia] [Google] [Baidu] |
Eric Maskin
Eric Stark Maskin (born December 12, 1950) is an American economist and mathematician. He was jointly awarded the 2007 Nobel Memorial Prize in Economic Sciences with Leonid Hurwicz and Roger Myerson "for having laid the foundations of mechanism design theory". He is the Adams University Professor and Professor of Economics and Mathematics at Harvard University. Until 2011, he was the Albert O. Hirschman Professor of Social Science at the Institute for Advanced Study, and a visiting lecturer with the rank of professor at Princeton University.Economics professor wins Nobel – The Daily Princetonian Early life and education Maskin was born in |
Roger Myerson
Roger Bruce Myerson (born March 29, 1951) is an American economist and professor at the University of Chicago. He holds the title of the David L. Pearson Distinguished Service Professor of Global Conflict Studies at The Pearson Institute for the Study and Resolution of Global Conflicts in the Harris School of Public Policy, the Griffin Department of Economics, and the college. Previously, he held the title The Glen A. Lloyd Distinguished Service Professor of Economics. In 2007, he was the winner of the Sveriges Riksbank Prize in Economic Sciences in Memory of Alfred Nobel with Leonid Hurwicz and Eric Maskin for "having laid the foundations of mechanism design theory." He was elected a Member of the American Philosophical Society in 2019. Biography Roger Myerson was born in 1951 in Boston. He attended Harvard University, where he received his A.B., ''summa cum laude'', and S.M. in applied mathematics in 1973. He completed his Ph.D. in applied mathematics from Harvard Universi ... [...More Info...] [...Related Items...] OR: [Wikipedia] [Google] [Baidu] |
