One of the recent attentions has been the utilization the problem of asymmetric information in the labour market. Efficiency wage theory has several variants, but the common thread is that the quality of workers in a firm is dependent on the wages paid in such a way that reducing the wage would reduce the quality of the workers and the profits of the firm. Therefore the firm will not cut wages even it was possible to do so on the current workers, or hire from unemployed workers. Therefore the wage may not fall to its market clearing level. Moral hazard problems are referred to as the shirking model in the principal-agent theory, where in the simple model, assumptions of a perfectly competitive market, employees are equally productive, and are paid the same wage.
Workers can either work and be productive, or be non-productive and shirk .
These incentives helped overcome the asymmetric information for the Ford Motor Company with its labour market principal-agent problem. Complexity of the items being traded will usually ensure there is asymmetric information in the particular product market. Therefore it is not just the uncertainty economic agents face, but the distribution of the information between agents that can influence their actions in the market. These strategies try to alleviate the effect of adverse selection and moral hazard problems from informational asymmetries, where costs to capture these information deficiencies are too expensive or impossible.