Frontiers of Microeconomics — Asymmetric Information, Political Economy, and Behavioral Economics Explained | Chapter 22 of Principles of Microeconomics
Frontiers of Microeconomics — Asymmetric Information, Political Economy, and Behavioral Economics Explained | Chapter 22 of Principles of Microeconomics What happens when economic agents have imperfect information or when psychological biases affect decisions? Chapter 22 of Principles of Microeconomics explores three advanced fields— asymmetric information , political economy , and behavioral economics —that deepen traditional economic models by incorporating real-world complexities. 🎥 Watch the full chapter summary below and subscribe to Last Minute Lecture for more textbook breakdowns and academic study guides! Asymmetric Information and Market Failures Markets can fail when one party has more or better information than another. Key problems include: Moral Hazard: Hidden actions that change behavior after a deal, like workers slacking off when unmonitored. Adverse Selection: Hidden characteristics cause bad products or risky buyers to dominate, lik...