(Solved):What are hidden actions and hidden information? View Answer…

 

Question

What are hidden actions and hidden information?

 

EXPERT ANSWER

Hidden Action is related to moral hazard problem of the Assymetric information. Here the principal cannot monitor or does not have full knowledge regarding the agent’s action or activities. An example will be the Principal Agent problem, where the Agent can shirk the duties and principal may be unaware of this action.

Hidden Information is related to adverse selection problem. Here one party does

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