Southwest Airlines is a major carrier based in Texas, and has made a strategy of cutting fares drastically on certain routes with large effects on air traffic in those markets…..
Describe either an adverse selection or moral hazard problem a company is facing.
Describe either an adverse selection or moral hazard problem a company is facing.Describe the qualities that make it either adverse selection or moral hazard. What is the source of the asymmetric information? Who is the less-informed party? Are there any wealth-creating transactions not consummated as a result of the asymmetric information? If so, could you consummate them? What advice/recommendations would you give the company?Incorporate concepts from the readings and lectures.