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Chapter 8: Q.3 (page 235)

Explain why dating can be considered a method to solve the adverse selection problem.

Short Answer

Expert verified

Dating may be seen of as a strategy for resolving the adverse selection dilemma since it aids in determining which information should be shared with the other person and which should not.

Step by step solution

01

Introduction

A situation in which the buyer has more information than the seller or the seller has more information than the buyer is known as adverse selection.
02

Explanation

Dating can be regarded a way for resolving the adverse selection dilemma since it aids in determining which information should be shared with the other person and which should not.
It fosters human interaction and bridges gaps, resulting in mutual consent.

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