Which of the following is NOT a fix for an adverse selection problem? Requiring

Question

Which of the following is NOT a fix for an adverse selection problem?

Requiring a given credit score in order to take on a loan.

Credibly signaling your quality with a college degree.

Requiring that shareholders of a bank maintain equity capital.

Looking at an applicant?s employment history before making a job offer.

Requiring a given credit score in order to take on a loan.

Credibly signaling your quality with a college degree.

Requiring that shareholders of a bank maintain equity capital.

Looking at an applicant?s employment history before making a job offer.

Explanation / Answer

The correct option is Requiring that shareholders of a bank maintain equity capital. Adverse selection is a situation where sellers have information buyers do not have or vice versa about the quality of the product and this leads to assymetric information

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