d. English auction.The text points out that asymmetric information can have deleterious effectson…

d. English auction.The text points out that asymmetric information can have deleterious effectson market outcomes.a. Explain how asymmetric information about a hidden action or a hiddencharacteristic can lead to moral hazard or adverse selection.b. Discuss a few tactics that managers can use to overcome these problems.An advertisement in the local paper offers a “fully loaded” car that is only sixmonths old and has only been driven 5,000 miles at a price that is 20 percentlower than the average selling price of a brand new car with the same options.Use precise economic terminology to explain whether this discount mostlikely reflects a “fantastic deal” or something else.The Economics of Information46910. Life insurance policies typically have clauses stipulating the insurance com-pany will not pay claims arising from suicide for a specified term—typicallytwo years from the date the policy was issued. Use precise economic termi-nology to explain the likely impact on an insurance company’s bottom line ifit were to eliminate such a clause.

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