Question

In a situation subject to asymmetric information, which party should use the screening techniques? A. Less informed party B. More informed party C. Neither party should use screens D. We do not have enough information to answer this question

Answer 1

A. Less informed party

Step-by-step explanation:

Asymmetric information , it is also called , the information failure ,

When on of the party of the economic transaction having greater material knowledge than the other party .

i.e. ,

When a seller of any goods , have greater knowledge than any buyer .

All economic transactions involve information asymmetries .

But , for situation of asymmetric information , the less informed party should use the screening techniques , so as to prevent itself from loss , due to incomplete information .