Adverse and Advantageous Selection in the Laboratory

We study two-player games where one-sided asymmetric information can lead to either adverse or advantageous selection. contrast behavior in these with settings both players are uninformed. find stark differences, suggesting that subjects do account for endogenous selection effects. Removing strategic uncertainty increases the fraction of who Subjects respond more than Using additional treatments we vary payoff feedback, connect this difference learning. also observe a significant appear understand effects but not apply knowledge. (JEL C92, D82, D91)