Free-rider problem aggravate adverse selection

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Describe two ways in which financial intermediaries help lower transaction costs in the economy.

Do you think the lemons problem would be more severe for stocks traded on the New York Stock Exchange or those traded over-the-counter?

Would you be more willing to lend to a friend if she put all of her life saving into her business than you would if she had not done so? Why?

Wealthy people often worry that others will seek to marry them only for their money. Is this a problem of adverse selection?

How does the free-rider problem aggravate adverse selection and moral hazard problems in financial markets?

How do insurers screen out good customers (provide examples from different insurance markets)? Why deductibles and co-payments in insurance contracts help reducing the moral hazard problems from the insured?

In Ivashina and Scharfstein (JFE 2010), why the increase in C&I loans in FRB data from September to mid-October 2008 might not be a sign of an increase in commercial bank lending?

Reference no: EM131012968

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