Screening (economics)

Screening in economics means choosing the best option when you have limited information. It's like picking a toy from a toy box when you can only see the top of the box. How do you know which toy is the best without being able to see all of them?

When businesses want to hire someone for a job, they usually put out job applications. But they might not know everything about the people who apply. So they use screening methods to find the best person for the job. This could be something like a background check or a test to see if the person has the skills needed for the job.

The same thing happens in other areas of economics, like insurance. An insurance company needs to know how likely it is that someone will file a claim before they offer them insurance. They use screening methods, like asking for medical records, to figure out how much risk they're taking on.

So screening is like a way to make the best choice when you don't have all the information. It helps companies and people make decisions based on what they know, even if they can't see everything.