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Chapter 22 HMWK

What concepts or theories did you find most interesting and/or useful?  Is there an area where you changed your thinking?

And on the content in this chapter - Asymmetric Information and Adverse Selection is a topic that many of you find interesting (and me also).  Here's a video on how it effects the used car market: https://www.youtube.com/watch?v=sXPXpJ5vMnU (Links to an external site.)Links to an external site.
How do you manage the affects of asymmetric information when you are shopping?






The ideas of asymmetric information and signaling were interesting to me. How people respond can reveal what is actually the case, as with choosing health and car insurance policies. I especially related to the example of gift giving...it reminded me of a conversation I just had with my boyfriend in which I said that it doesn't really matter what the monetary value of the gift is (or even fulfilling any particular wish list) because what I'm really paying attention to is how a gift he chooses reminds him of me.

I was also intrigued with the explanations of the voting systems. Of course, I've already been disillusioned and believe that national policies are rarely changed by the ballot box alone. Anything meaningful or substantial has to be community-driven. But it is interesting to see how in the Condorcet Paradox, the order in which options are proposed influences the outcome.

Relating to behavioral economics, knowing that I can overestimate my abilities and be inconsistent with savings goals, I decided to open another bank account. It is at a different location and I did not link any card to it, so it is more difficult for me to access the funds. I have direct deposit set up, so the money is hidden before I have the chance to change my mind. Using this method has been much more successful than any app I've downloaded or accounting method I've tried...leading me to save 20% of every paycheck since February! In September I will be able to gain some insight and explore how many poor people navigate living, saving, and borrowing when I visit with a microfinancing company in Paraguay.

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