Contrary to the prediction of the classic adverse selection theory, informed speculators receive better pricing relative to uninformed liquidity traders in over-the-counter financial markets. Dealers compete for information by chasing informed orders so as to better position their future price...

I analyze the interaction between buyers' information acquisition and market liquidity in over-the-counter markets with adverse selection. If a buyer anticipates that future buyers will acquire information about asset quality, she has an incentive to acquire information to avoid buying a lemon...

We analyze a canonical binary-action coordination game under the global games framework. To reduce coordination failure, we propose a novel intervention program that screens agents based on their heterogeneous interim beliefs. Compared with conventional government-guarantee type of programs, it...