Concepts: Asymmetric information, moral hazard, principal-agent problem
Background: Gi-hun meets with his childhood friend Cho Sang-woo who is now wanted for financial crimes. Sang-woo is a former team leader at an investment back. He invested his clients’ money in derivatives and futures options, losing 650 million won. Song-woo later admits that he lost 6 billion won and used family assets as financial collateral.
Question: Cho Sang-woo is not the only “rogue trader” who lost millions of dollars and faced criminal charges. Research three rogue traders who made the news in the past thirty years. Show how it illustrates asymmetric information and the principal-agent problem.
Background: Tomohe was asked to observe Himura. The stated goal is to detect his weaknesses. However, she was not aware of the real objective of her mission.
Question: Is Tomohe affected by not knowing the real goals of her mission? Did lying to Tomohe help the mission succeed? Explain the consequences of such information asymmetry.
