In a two-sided asymmetric information market, the role of the accuracy of consumers' imperfect and private information on the level of fraud, incidence of fraud and trade under price rigidity is examined. Consumers receive a costless but noisy private signal of quality. The product offered in...

Riordan and Sappington (JET, 1988) show that in an agency relationship in which the agent's type is correlated with a public ex post signal, the principal may attain first best (full surplus extraction and efficient output levels) if the agent is faced with a lottery such that each type is...

This paper presents a general framework for constructing and solving the multivariate static linear quadratic Gaussian (LQG) rational inattention tracking problem. We interpret the nature of the solution and the implied action of the agent, and we construct representations that formalize how the...

We study signaling environments with two features that are common in practice: first, complete-information bliss points are heterogeneous across different types of senders; second, receivers observe many choices by each sender, rather than a single decision. We prove that, ironically, a...