Adverse Selection, Risk Sharing and Business Cycles
نویسندگان
چکیده
منابع مشابه
Adverse Selection, Risk Sharing and Business Cycles∗
I consider a real business cycle model in which agents have private information about an idiosyncratic shock to their value of leisure. I consider the mechanism design problem for this economy and describe a computational method to solve it. This is an important contribution of the paper since the method could be used to solve a wide class of models with heterogeneous agents and aggregate uncer...
متن کاملAdverse Selection and Self-fulfilling Business Cycles∗
We develop a macroeconomic model with adverse selection. A continuum of households purchase goods from a continuum of anonymous producers. The quality of products can only be learned after trade. Adverse selection arises as low-quality goods deliver higher profits for producers but are less desirable for households. Higher aggregate demand induces more high-quality goods, raises average quality...
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The present paper thoroughly explores second-best efficient allocations in an insurance economy with adverse selection. We start with a natural extension of the classical model, assuming less than perfect risk perception. We characterize the constraints on efficient redistribution, and we summarize the incidence of incentive constraints on the economy with the notions of weak and strong adverse...
متن کاملImperfect Risk Sharing, Output-Ination Tradeo¤s and Business Cycles
How do frictions in asset markets a¤ect business cycle dynamics? This paper argues that imperfect risk-sharing among heterogeneous households, due to frictions in asset markets, ampli es price stickiness endogenously and consequently increases the persistence and volatility of business cycles. The main economic mechanism is an idiosyncratic wealth e¤ect on individual households labor supply. T...
متن کاملAn Experimental Investigation of Risk Sharing and Adverse Selection
Does adverse selection hamper the effectiveness of voluntary risk sharing? How do differences in risk profiles affect adverse selection? We experimentally investigate individuals’ willingness to share risks with others. Across treatments we vary how risk profiles differ between individuals. We find strong evidence for adverse selection if individuals risk profiles can be ranked according to fir...
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ژورنال
عنوان ژورنال: SSRN Electronic Journal
سال: 2014
ISSN: 1556-5068
DOI: 10.2139/ssrn.2526301