Microeconomics: Theory and Applications with Calculus, 4e

18 Asymmetric Information

The buyer needs a hundred eyes, the seller not one.

—George Herbert (1651)

CHALLENGE Dying to Work

In part because of the differing amounts that firms invest in safety, jobs in some firms are more dangerous than in others. In 2010, the United States had a particularly bad year for major disasters: A blast at a Washington state refinery killed 7 workers, 11 workers died when BP’s Deepwater Horizon oil rig exploded in the Gulf of Mexico, and 29 coal miners died in a disaster at Massey Energy’s West Virginia mine explosion. These disasters are only the tip of the iceberg as thousands of workers are killed on the job every year—4,585 in 2013. Major disasters have occurred in other countries. An apparel factory collapse ...