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Vanessa lives in Rockhampton, which has a population of 80,000. Blaine lives in Sydney, which has a population of 4.3 million. Both are looking for
Vanessa lives in Rockhampton, which has a population of 80,000. Blaine lives in Sydney, which has a population of 4.3 million. Both are looking for a new apartment. Rockhampton's rents vary from $100 to $200 a week whereas Sydney's vary from $300 to $750 a week. Both are only searching for the cheapest apartment. Select the item from the list provided to make the following statements true. Both parties should search until their expected value of 1. Adverse selection marginal benefits from searching equals their 2. 20% 3. Asymmetric information - 4. Marginal benefit As the apartments Blaine is looking at has a greater price range than Vanessa, ceteris paribus, Blaine should 5. Principal-agent problem expect to spend 6. Expected value 7. 80% Just before starting her search, Vanessa secures a new 8. Costly to fake principal job that pays twice as much as her current job. She has 9. More time looking to start the new job tomorrow. Ceteris paribus, and given 10. Moral hazard her new job, this means Vanessa should now spend 11. Marginal cost 12. Less time looking
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