We argue that many firms become publicly traded on a stock exchange as the first stage of a longer term divestment plan. Making a direct sale of unlisted stock may be associated with great adverse selection costs. The publicly listed stock price reduces adverse selection by aggregating the...

During the 19th century, poor and orphan Swedish children were boarded out. The foster-parents' compensation was determined in English auctions. Some children were re-auctioned. We use historical data from such auctions to study whether informational asymmetry and possibly adverse selection...

We present a model of financial contracting in the presence of asymmetric information between entrepreneur and investor. Either liquidation threat or governance control can be used to protect investor’s interests against expropriation risk. The two parties first agree to a financial...

We consider Bayesian incentive compatible and individually rational mechanisms for resolving conflicts between two agents who are uncertain about each other's fighting potential. We model the default option of outright conflict as a probabilistic contest. Examples of such contests may be...

We consider a two-player contest for a prize of common but uncertain value. We show that less resources are spent in equilibrium if one party is privately informed about the value of the prize than if either both agents are informed or neither agent is informed. Furthermore, the uninformed agent...

We study an asymmetric information model in which two firms are active on a market where buyers only observe the average quality supplied. Quantities and cost structures are exogenously given and firms compete in quality. Before choosing their qualities, they bargain over a perfectly enforcable...

Would you go to the dentist more often if it were free? Observational data is here used to analyze the impact of full-coverage insurance on dental care utilization using different identification strategies. The challenge of assessing the bite of moral hazard without an experimental study design...

Two firms produce different qualities at possibly different, constant marginal costs. They compete in quantities on a market where buyers only observe the average quality supplied. The model is a generalization of the standard Cournot duopoly, which corresponds to the special case where the two...

Micro data from a dental insurance natural experiment is used to analyze why agents opt out of insurance. The purpose is to relate the dropout decision to new information on risk, acquired by the policy holder and the insurer. The results show that agents tend to leave the insurance when...

The empirical evidence of adverse selection in insurance markets is mixed. The problem in assessing the extent of adverse selection is that private information, on which agents act, is generally unobservable to the researcher, which makes it difficult to distinguish between adverse selection and...