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We study learning in perfect competition. A representative price-taking firm sells a good whose quality is unknown to some buyers. The uninformed buyers use the price to infer information about quality. Even though the firm is a price-taker, information is disseminated though the price. It is...
Persistent link: https://www.econbiz.de/10010942762
Risk classification refers to the use of observable characteristics by insurers to group individuals with similar expected claims, compute the corresponding premiums, and thereby reduce asymmetric information. With perfect risk classification, premiums fully reflect the expected cost associated...
Persistent link: https://www.econbiz.de/10010693198
In this paper we compare the welfare effects of unemployment insurance (UI) with an universal basic income (UBI) system in an economy with idiosyncratic shocks to employment. Both policies provide a safety net in the face of idiosyncratic shocks. While the unemployment insurance program should...
Persistent link: https://www.econbiz.de/10011071798
We discuss the difficult question of measuring the effects of asymmetric information problems on resource allocation. Three problems are examined: moral hazard, adverse selection, and asymmetric learning. One theoretical conclusion, drawn by many authors, is that information problems may...
Persistent link: https://www.econbiz.de/10010570021