Asymmetric Information in Finance Explained - Raghavendra Rau
Gresham College Lectures
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Exploring Asymmetric Information in Finance
The chapter thoroughly examines the concept of asymmetric information in finance, discussing the implications for stakeholders like shareholders, bondholders, and workers. It explains how information disparities lead to market distortions, trust issues, and adverse selection problems like those illustrated in examples from the used car market and labor markets. The discussion also covers solutions to these challenges, such as signaling and screening, along with insights from influential economists like Milton Friedman and George Akerlof.
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