Final answer:
Employees with authority limits are expected to perform an appropriate review process and address red flags before approving a transaction, mirroring the due diligence expected from bank supervisors. This process is crucial for preventing oversight issues, as demonstrated by the 2008-2009 recession's impact on banks, and applies similarly to buyer-seller relationships in various markets.
Step-by-step explanation:
Employees with authority limits should perform an appropriate review process before approving a transaction, particularly in the financial sector. This process typically involves assessing the transaction for any potential risks or red flags. If red flags are identified, these employees are expected to take additional verification steps before proceeding. This cautious approach parallels the regulatory expectations set forth in the 1990s for bank supervisors, whereby findings had to be made public and action was required immediately upon identifying issues. The 2008-2009 recession highlighted the need for diligence as many banks faced criticism for not identifying financial vulnerabilities earlier. Likewise, buyers in general markets rely on certain mechanisms to overcome the challenges of imperfect information, ensuring that transactions are conducted even when buyers cannot become experts in every field.