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Inverse Adverse Selection: The Market for Gems
Dari-Mattiacci, Giuseppe; Onderstal, Sander; Parisi, … - 2011
This paper studies markets plagued with asymmetric information on the quality of traded goods. In Akerlof's setting, sellers are better informed than buyers. In contrast, we examine cases where buyers are better informed than sellers. This creates an inverse adverse selection problem: The market...
Persistent link: https://www.econbiz.de/10010325638
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When do we have borrower or credit volume rationing in competitive credit market with imperfect information?
Kraus, Daniel - 2010
This paper examines the conditions for credit volume or borrower rationing in a competitive credit market in which the project characteristics are private information of the borrowers. There can only be credit volume rationing if the higher-risk credit applicants have a higher return in the...
Persistent link: https://www.econbiz.de/10010319299
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Negative externalities and equilibrium existence in competitive markets with adverse selection
von Siemens, Ferdinand; Kosfeld, Michael - 2009
Rothschild and Stiglitz (1976) show that there need not exist a competitive equilibrium in markets with adverse selection. Building on their framework we demonstrate that externalities between agents - an agent's utility upon accepting a contract depends on the average type attracted by the...
Persistent link: https://www.econbiz.de/10010276700
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Observing Unobservables: Identifying Information Asymmetries with a Consumer Credit Field Experiment
Karlan, Dean S.; Zinman, Jonathan - 2005
Information asymmetries are important in theory but difficult to identify in practice. We estimate the empirical importance of adverse selection and moral hazard in a consumer credit market using a new field experiment methodology. We randomized 58,000 direct mail offers issued by a major South...
Persistent link: https://www.econbiz.de/10010369211
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Communication & competition
Goeree, Jacob K.; Zhang, Jingjing - 2012
Charness and Dufwenberg (American Economic Review, June 2011, 1211-1237) have recently demonstrated that cheap-talk communication raises efficiency in bilateral contracting situations with adverse selection. We replicate their finding and check its robustness by introducing competition between...
Persistent link: https://www.econbiz.de/10010316885
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How complex are the contracts offered by health plans?
Olivella, Pau; Vera-Hernandez, Marcos - In: SERIEs - Journal of the Spanish Economic Association 1 (2010) 3, pp. 305-323
When health plans compete under adverse selection, the competitive equilibrium set of contracts is unique. However, the allocation of these contracts among health plans is undetermined. We show that three health plans suffice to sustain an equilibrium where each health plan offers a single...
Persistent link: https://www.econbiz.de/10010317093
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Self-fulfilling liquidity dry-ups
Malherbe, Frédéric - 2010
confined to project initiation, I find that: (1) when agents expect a liquidity dry-up on such markets, they optimally choose … as it reduces ex-post market participation, which worsens adverse selection and dries up market liquidity; (3) liquidity … idiosyncratic, privately known, illiquidity shocks, I show that: (5) it increases market liquidity; (6) illiquid agents are better …
Persistent link: https://www.econbiz.de/10011506705
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Continuous Time Trading in Markets with Adverse Selection
Janssen, Maarten C.W.; Karamychev, Vladimir - 2000
We investigate the nature of the adverse selection problem in a market for adurable goodwhere trading and entry of new buyers and sellers takes place in continuoustime. In thecontinuous time model equilibria with properties that are qualitativelydifferent from thestatic equilibria, emerge....
Persistent link: https://www.econbiz.de/10010324471
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Dynamic Insurance and Adverse Selection
Janssen, Maarten C.W.; Karamychev, Vladimir A. - 2001
We take a dynamic perspective on insurance markets under adverseselection and study a generalized Rothschildand Stiglitz model where agents may differ with respect to theaccidental probability and their expenditure levels incase an accident occurs. We investigate the nature of dynamicinsurance...
Persistent link: https://www.econbiz.de/10010324841
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Adverse selection, commitment and exhaustible resource taxation
Ing, Julie - 2016
Governments design taxation schemes to capture resource rent. However, they usually propose contracts with limited duration and possess less information on the resources than the extractive firms do. This paper investigates how information asymmetry on costs and an inability to commit to...
Persistent link: https://www.econbiz.de/10011753327