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Answer to Question #77617 in Microeconomics for SHUBHAM SINGH
Question #77617
(a) Differentiate between hidden information and hidden action. Suggest measures for
minimizing the consequences of such problems.
minimizing the consequences of such problems.
Expert's answer
(a) Hidden action and hidden information: After the contract is made, one of the actors' actions cannot be observed (hidden action); if it can be observed, its qualities cannot be determined (hidden information).
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