screening

=__Screening:__=


 * __Introduction:__**

Screening is a strategy used by an uninformed person or party to try to group or categorize individuals by their characteristics. The screening process can include the individual's own actions or choices in response to an inquiry, and their past history. At a more general level, screening is a strategy of using adverse selection in order to uncover a quality or characteristic. At a very low level, screening is trying to sort bad information from good information. In the market of buyers and sellers, screening can take place by both parties. The seller will use screening to determine if the buyer is interested and is able to make the purchase. The buyer will use screening to determine if the seller is truthful regarding the product being sold.

The concept of screening should be distinguished from signaling, which implies that the informed agent moves first. One of the pioneers of screening was [|Joseph E. Stiglitz] (an Indiana native).

__**Real-World Screening Examples:**__ 1) Auto Insurance companies requesting past driving and accident history in order to determine to provide coverage and what rates to charge.

2) Banks performing credit checks to determine level of credit to grant and the rates to charge.

3) MBA schools requiring a GMAT test to help predict the success level of a future student and to help determine admission to the school.

4) A company interview process designed to learn more about a job candidate. Stated job requirements can act as a filter to help ensure a candidate has the desired background.

5) Boy and Girl Scout organizations performing background checks on volunteers. This helps reduce the possibility of negative issues in the future.

6) Websites requring a credit card to verify possible age and / or address. This requirement acts as a filter since most credit cards require one to be 18 or older and must have a valid address.

7) Medical Screening for MS, Cancer, and other diseases.

8) Airport Security check points and border crossings. Has the physical capability to filter out undesirable items and passengers from boarding a plane.


 * __External links and references:__**

1) [|About:Economics-screening] 2) Managerial Economics and Business Strategy (5th Edition) - Michael R. Baye 3) [|Wikipedia -Screening (economics)] 4) [|Nobel Prize Economic website]


 * __Example Multiple Choice Questions:__**

Screening occurs when: a) an informed party attempts to sort indivduals by their characteristics b) after 6pm when the phone rings c) an uninformed party attempts to sort individuals by their characteristics d) an informed party attempts to sort groups by their characteristics
 * Question 1:**


 * Answer is: c) an uninformed party attempts to sort individuals by their characteristics**

Which of the following are examples of Screening: a) Job description states salary range b) Job description states working hours c) Job description states working location d) Job description states on-call support e) All of the above
 * Question 2:**

number of candidates that apply for a job.
 * Answer is: e) All of the above. Each one of the items act as a filter that will reduced the

Question 3:** Which of the following questions that a father might ask of his daughter's Date is not an example of Screening: a) what kind of car he drives? b) what kind of job he has? c) what kind of medical coverage he has? d) where they are going tonight?

signaling a suttle hint that something might happen to the Date requiring medical coverage if anything happens to his daughter.**
 * Answer is: c) what kind of medical coverage he has. This answer is really an example of