1. Some retailers must contend with excessive customer returns of purchased items. For example, a person may purchase an expensive item at a clothing store; wear it to a fancy event, then return the item. For another example, a person may purchase 3 different laptop computers from an electronics store, try all three of them for a few days, and then return the two laptops that she likes the least.
a. To what extent is the problem of excessive customer returns related to adverse selection? Carefully explain in four or more sentences, demonstrating a clear understanding of the concept of adverse selection in your explanation.
b. Suggest some policies and/or procedures that retailers might employ to reduce the problem of excessive returns, and explain why you think that each suggestion could be effective