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Dynamic markets for lemons : performance, liquidity, and policy intervention
Moreno, Diego; Wooders, John - In: Theoretical economics : TE ; journal of the Econometric … 11 (2016) 2, pp. 601-639
Persistent link: https://www.econbiz.de/10011500708
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Adverse selection and liquidity distortion in decentralized markets
Chang, Briana - 2010
determinants of market liquidity in decentralized markets, we are going to analyze this question in a competitive market setting … liquidity. The resulting friction therefore prohibits resources from reallocating efficiently. In the application of capital … reallocation, we further show that this trading friction can generate significant economic fluctuations. -- Liquidity ; Search …
Persistent link: https://www.econbiz.de/10008748542
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Dynamic markets for lemons: performance, liquidity, and policy intervention
Moreno, Diego; Wooders, John - In: Theoretical Economics 11 (2016) 2, pp. 601-639
We study non-stationary dynamic decentralized markets with adverse selection in which trade is bilateral and prices are determined by bargaining. Examples include labor markets, housing markets, and markets for financial assets. We characterize equilibrium, and identify the dynamics of...
Persistent link: https://www.econbiz.de/10011599579
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Meet the lemons : An experiment on how cheap-talk overcomes adverse selection in decentralized markets
Siegenthaler, Simon - 2017
We report on an experiment on decentralized markets in the presence of adverse selection. When allowing for costless and non-binding communication (cheap-talk), there exists a partially separating equilibrium that results in a substantially higher efficiency level than the adverse selection...
Persistent link: https://www.econbiz.de/10012969275
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A Shirking Theory of Referrals
Eldridge, Damien - 2013
The health care industry in some countries displays a gated structure. Rather than approaching a specialist directly, a patient will first seek a referral from a general practitioner. We provide one possible explanation for such an industry structure. If the outcome of treatment depends on the...
Persistent link: https://www.econbiz.de/10013085990
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A Shirking Theory of Referrals
Eldridge, Damien - 2009
Many service industries, including the medical and legal professions in some countries, display a gated structure. Rather than approaching a final producer directly, a consumer will first seek a referral from an intermediary. In this paper, we provide one possible explanation for such an...
Persistent link: https://www.econbiz.de/10012718769
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A Learning Theory of Referrals
Eldridge, Damien - 2009
Many service industries, including the medical and legal professions in some countries, display a gated structure. Rather than approaching a final producer directly, a consumer will first seek a referral from an intermediary. Such an industry structure might help to alleviate adverse selection...
Persistent link: https://www.econbiz.de/10012718770
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Trading Dynamics with Private Buyer Signals in the Market for Lemons
Kaya, Ayca - 2019
We present a dynamic model of trading under adverse selection in which a seller sequentially meets buyers, each of whom receives a noisy signal about the quality of the seller's asset and offers a price. We fully characterize the equilibrium trading dynamics and show that buyers' beliefs about...
Persistent link: https://www.econbiz.de/10012893257
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Imperfect Information Transmission and Adverse Selection in Asset Markets
Choi, Michael - 2016
This paper studies asset markets where buyers of assets do not inherit private information from previous owners and must learn asset quality over time. Imperfect information transmission reduces asymmetric information, but also reduces the trading volume, prices and efficiency. This result is...
Persistent link: https://www.econbiz.de/10013005245
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Dynamic Adverse Selection and Liquidity
Rosu, Ioanid - 2020
Does a larger fraction of informed trading generate more illiquidity, as measured by the bid--ask spread? We answer this question in the negative in the context of a dynamic dealer market where the fundamental value follows a random walk, provided we consider the long run (stationary)...
Persistent link: https://www.econbiz.de/10012852155