Describe the information asymmetry

Reference no: EM13330909

Soft selling occurs when a buyer is skeptical of the usefulness of a product and the seller offers to set a price that depends on realized value. For example, suppose you're trying to sell a company a new accounting system that will reduce costs by 10%. Instead of naming a price, you offer to give the product in exchange for 50% of their cost savings. Describe the information asymmetry, the adverse selection problem, and why soft selling is a successful signal.
Note: Need to consider the adverse selection.
Individual problems: 19-6 Hiring Employees
You need to hire some new employees to staff your start-up venture. You know that potential employees are distributed throughout the population as follows, but you can't distinguish among them:
Employee Value Probability
$50,000 0.25
$60,000 0.25
$70,000 0.25
$80,000 0.25

What is the expected value of five employees you hire?

Reference no: EM13330909

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