Purchase Solution

Soft Selling Adverse selection

Not what you're looking for?

Ask Custom Question

Soft selling occurs when a buyer is skeptical of the quality or usefulness of a product or service. For example, suppose you're trying to sell a company a new accounting system that will reduce costs by 10%. Instead of asking for a price,you offer to give them the product in exchange for 50% of their cost savings. Describe the information asymmetry, the adverse selection problem,and why soft selling is a successful signal.

Chapter 16 of Book:
Managerial Economics: A Problem Solving Approach
Authors: Luke M. Froeb and Brian T. McCann

Purchase this Solution

Solution Summary

Describe the information asymmetry, the adverse selection problem,and why soft selling is a successful signal.

Solution Preview

Hi there,

There are two ways in which there is information asymmetry. On the one hand, the client doesn't know whether it will in fact reduce costs by 10% but they seller might know. On the other hand, ...

Purchase this Solution


Free BrainMass Quizzes
Economics, Basic Concepts, Demand-Supply-Equilibrium

The quiz tests the basic concepts of demand, supply, and equilibrium in a free market.

Pricing Strategies

Discussion about various pricing techniques of profit-seeking firms.

Elementary Microeconomics

This quiz reviews the basic concept of supply and demand analysis.

Basics of Economics

Quiz will help you to review some basics of microeconomics and macroeconomics which are often not understood.

Economic Issues and Concepts

This quiz provides a review of the basic microeconomic concepts. Students can test their understanding of major economic issues.