Information Aggregation in Dynamic Markets with Adverse Selection
نویسندگان
چکیده
منابع مشابه
Adverse selection in dynamic matching markets
We study the Akerlofian adverse selection problem in a dynamic matching model where the competitive situation varies across different meetings. The 'lemons principle' is shown to limit the high quality sales within a wider range of quality distributions than in the Walrasian benchmark. High quality goods can nevertheless be traded, albeit less frequently than the low quality goods. For certain ...
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STEP 0: Suppose that for some ε > 0, the statement is not true. Then one can find an increasing sequence m1, m2, etc., such that for any j, in equilibrium (S∗ mj Y ∗ mj ), E[|yKmj − X(ω)|] ≥ ε. Consider this sequence for the rest of the proof. For notational convenience, without loss of generality, we assume that m1 = 1, m2 = 2, etc.; that is, we have a sequence of games ΓKm and corresponding e...
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This paper considers a market with adverse selection in the spirit of Rothschild and Stiglitz (Quart. J. Econ. 90 (1976) 629). The major departure from existing approaches is that we model a decentralized market that is open-ended and constantly refilled by new participants, e.g., by new workers and firms in the case of a labor market. The major novelty of this approach is that the distribution...
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1 Akerlof (1970) shows how asymmetric information can create adverse selection and undermine market efficiency. Economic and legal institutions, such as auditors, underwriters, accountants, or used-car dealers, often emerge to limit adverse selection and allow markets to function. As a result, direct government interventions are usually unnecessary. If a market does collapse, however—presumably...
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Since Akerlof’s (1970) seminal paper the existence of adverse selection due to asymmetric information about quality is well-understood. Given the negative implications for trading and welfare, the question arises of how such markets come into existence. We consider a market in which firms make observable investment/entry decisions that generate products of a quality that becomes known only to t...
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ژورنال
عنوان ژورنال: SSRN Electronic Journal
سال: 2017
ISSN: 1556-5068
DOI: 10.2139/ssrn.2959043