We propose a criterion of stability for two-sided markets with asymmetric information. A central idea is to formulate matching functions, off-path beliefs conditional on counterfactual pairwise deviations, and on-path beliefs in the absence of such deviations. A matching-belief configuration is...

We study the informational role of prices. To that end, we consider the framework of a dominant firm with a competitive fringe. When the competitive fringe is large enough, there exists a unique fully revealing equilibrium, in which the price conveys full information about the quality of the...

This paper presents a market with asymmetric information where a privately revealing equilibrium obtains in a competitive framework and where incentives to acquire information are preserved. The equilibrium is efficient, and the paradoxes associated with fully revealing rational expectations...