Introduction In the realm of decision-making, an insidious challenge arises when buyers and sellers interact in markets characterized by information asymmetry. The Lemon Market Problem, a mental model deeply rooted in human psychology, plays a significant role in shaping our day-to-day choices. This concept refers to the adverse selection problem, where the quality of goods […]
Introduction: In the realm of decision-making, a fundamental challenge arises when one party, known as the principal, delegates authority to another party, known as the agent, to act on their behalf. This situation sets the stage for the Principal-Agent Problem, a concept rooted in human psychology that has profound implications for our day-to-day lives. The […]
The world of decision-making is complex, often influenced by a myriad of factors. One such influential factor is the ‘Moral Hazard’ mental model. This model, deeply rooted in human psychology, plays a significant role in our day-to-day lives, shaping our choices and actions. Understanding Moral Hazard Moral Hazard refers to a situation where an individual […]