Question

Which problem of asymmetric information are prospective employers trying to solve when they ask applicants to go through a job interview. Is that the end of the information asymmetry?

Short answer

Employers are using job interviews to try to overcome the problem of adverse selection. It mitigates the asymmetric information problem, but not completely eliminates it, because the moral hazard problem arises after the selection or appointment.

Step-by-step solution

Content Introduction

Asymmetric information refers to information that is not the same, therefore inconsistency occurs when there is a difference in the information offered to people that is not the actual information.

Content Explanation

Employers are using job interviews to try to overcome the problem of adverse selection. It mitigates the asymmetric information problem, but not completely eliminates it, because the moral hazard problem arises after the selection or appointment. A job interview allows a company to learn everything there is to know about a potential employee. As a result, the problem of information asymmetry is alleviated.