1. Briefly explain why asymmetric information can lead to inefficient market outcomes or cause risk-averse individuals to bear excessive risk.
   • Use the theories and models discussed in the book in your answer.
2. Why are we concerned with asymmetric information when discussing an employer-employee relationship? Give a real-life example, and discuss the main worries from a manager's (i.e., employer's) perspective and how the employer can deal with the issues that arise.
   • Use the theories and models discussed in the book in your answer.