DBS IB Economics - Market Failure!Information Asymmetry Felex Lau Jon Liu Nick Wong

Ahh… it’s HL

1Information to!Sellers > Buyers

Information not told to consumers

Information not told to consumers

Consumers know less

than they should

Government Response?

Government Response?

Regulation

Government Response?

Regulation

Government Response?

Regulation

Provision of Information

Government Response?

Regulation

Provision of Information

Government Response?

Regulation

Licensure

Provision of Information

Government Response?

Regulation

Licensure

Provision of Information

Information to!

Buyers > Sellers 2

“Moral Hazard”

“Moral Hazard”

…but doesn’t face the cost of the risks.

The insurance market

Adverse Selection

Market of health insurance

Safety in workplace

Safety in workplace

Hiding safety risks

3Recap

Buyers > Sellers

Sellers > Buyers Government response: Regulation Provision of Information

Licensure

“Moral Hazard” Adverse Selection

Safety in Workplace

The End. Thanks!

References     Bilingual   Laws   Informa1on   System.   Department   of   Jus2ce,   n.d.   Web.   24   Oct   2012.   <h>p://

www.legisla2on.gov.hk/blis_ind.nsf/WebView?OpenAgent&vwpg=CurAllEngDoc*100*100*123#123>    Coyoty.  “Blue  Screens  of  Life”.  Photograph.  Flickr.  Yahoo,  26  Oct  2011.  Web.  22  Oct  2012.  <h>p://

www.flickr.com/photos/30679992@N06/6286930267/>     Davidson,   Kelly.   “Shopping   Cart”.   Photograph.   Flickr.   Yahoo,   13   Jan   2011.  Web.   24   Oct   2012.  

<h>p://www.flickr.com/photos/kellydavidson/5352106637/>     “Food   labelling”.   Centre   for   Food   Safety.   The   Government   of   the   Hong   Kong   Special  

Administra2ve   Region,   22   Aug   2012.   Web.   24   Oct   2012.   <h>p://www.cfs.gov.hk/english/consumer_zone/foodsafety_labelling.html>  

  Hao,   Zheng.   “食物标签：了解它为你的饮食做更健康的选择”.  Nutri1on   Duo.   N.p.,   Aug   2010.  Web.  24  Oct  2012.<h>p://nutri2onduoch.blogspot.hk/2010/08/blog-­‐post.html>  

 “’How  to  Apply’  Series  and  FAQ”.  Food  and  Enviornmental  Hygiene  Department.  The  Government  of   the   Hong   Kong   Special   Administra2ve   Region,   27   Feb   2012.   Web.   24   Oct   2012.   <h>p://www.fehd.gov.hk/english/faq/licence/what_types_of_licences.html>  

  IB   Learner   Profile   Booklet.   Interna2onal   Baccalaureate:   Cardiff,   2008.   Web.   <h>p://ibo.org/programmes/profile/documents/Learnerprofileguide.pdf>  

  “iPhone   5   Teardown”.   iFixit.   N.p.,   n.d.   Web.   22   Oct   2012.   <h>p://www.ifixit.com/Teardown/iPhone+5+Teardown/10525/5>  

  lungstruck.   “Medica2on”.   Photograph.   Flickr.   Yahoo,   5  Mar   2010.  Web.   24   Oct   2012.   <h>p://www.flickr.com/photos/lungstruck/4409421695/>  

  Stolk,   Gerard.   “Sale”.   Photograph.   Flickr.   Yahoo,   28   Dec   2011.   Web.   22   Oct   2012.   <h>p://www.flickr.com/photos/gerardstolk/6587076433/>  

  Who’s   Photo?.   “Council   House   safety   net   &   lights”.   Photograph.   Flickr.   Yahoo,   29   Dec   2010.  <h>p://www.flickr.com/photos/whosphoto/5304003468/>