Question $3(1$ point$)$

Consider a monopolistic principal who hires an agent who must exert an effort to complete a task.

The agent can have a high cost or a low cost of effort.

Comparing the symmetric information outcome to the asymmetric information outcome, which conclusion would you reach?

The overall total surplus is higher under asymmetric information since the agent with the high cost is better$-$off when her type is not verifiable.

The overall total surplus is higher under asymmetric information since the agent with a low cost is better$-$off when her type is not verifiable.

The overall total surplus is lower under asymmetric information, however, the agent with a low cost is better$-$off when her type is not verifiable.

The overall total surplus is lower under asymmetric information, however, the agent with a high cost is better$-$off when her type is not verifiable.