Legislation
- The government may try to ensure all parties have adequate access to information by legislation.
Examples
- Adding nutritional information and ingredients in food or drinks.
- Requiring health warnings on alcohol and cigarettes.
- Creating laws that make it illegal for customers to give false information (insurance).
Regulation
- The government may try to enforce monitoring of industries to reduce the impact of market failure.
Examples
- Financial regulations for financial corporations
- Stock market regulations
- Regulations to provide information
- Public health campaigns
- Information about city planning or disturbances
Private Responses
- Firms may choose to implement changes to improve information symmetries.
Signaling
- When participants who have more information communicate the information to the other party.
- Signaling is always done by the participant with more information.
Pros of Signaling
- Cost-effective
- Increases amounts of information to all participants
- Improves efficiency
Cons of Signaling
- False information
- Time consuming
Examples
- When hiring staff, employers ask people for their skills via a resume.
- A long warranty on cars to ensure consumers that they are high quality.
Screening
- When participants who lack information force others to reveal information.
- Screening is always done by the participants with less information.
Examples
- With the same example of hiring, firms could require that all applicants have certain degrees, qualification, or speak languages.