BUSI 620 MENTOR It's Your Life/busi620mentor.com BUSI 620 MENTOR It's Your Life/busi620mentor.com | Page 45
b) Individual problems: 19 – 5 and 19 – 6.
Individual Problem 19-5: Soft selling occurs when a buyer is skeptical of the usefulness of a product and the seller offers to set a price that depends on realized value. For example, suppose you’ re trying to sell a company a new accounting system that will reduce costs by 10 %. Instead of naming that 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.
Individual Problem 19-6: You need to hire some new employees to staff your start-up venture. You know that potential employees are distributed throughout the population as follows, but you can’ t distinguish among them:
Employee Value Probability $ 50,000 0.25 $ 60,000 0.25 $ 70,000 0.25
b) Individual problems: 19 – 5 and 19 – 6.
Individual Problem 19-5: Soft selling occurs when a buyer is skeptical of the usefulness of a product and the seller offers to set a price that depends on realized value. For example, suppose you’ re trying to sell a company a new accounting system that will reduce costs by 10 %. Instead of naming that 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.
Individual Problem 19-6: You need to hire some new employees to staff your start-up venture. You know that potential employees are distributed throughout the population as follows, but you can’ t distinguish among them:
Employee Value Probability $ 50,000 0.25 $ 60,000 0.25 $ 70,000 0.25