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    Question

    In the context of asymmetric information, what is 'screening'?

    A A method where one party gathers information to reduce information asymmetry Correct Answer Incorrect Answer
    B A process of selecting high risk individuals for insurance Correct Answer Incorrect Answer
    C A strategy to increase market inefficiency Correct Answer Incorrect Answer
    D A way to enhance adverse selection Correct Answer Incorrect Answer
    E A regulatory requirement for financial markets Correct Answer Incorrect Answer

    Solution

    Screening involves efforts by the less informed party to gather information about the product or service to reduce information asymmetry and make more informed decisions.

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