Markets, Moral Hazard, and Equilibrium Selection [Preliminary Draft - UTDallas Seminar]
نویسندگان
چکیده
We examine the effectiveness of asset markets when the final outcome upon which the asset payout is based maybe affected by the unobservable actions of the traders. Players participate in a minimum effort coordination game preceeded by an information market where the asset payoffs are determined by the observed minimum effort level in the subsequent game. We examine both the informativeness of the markets and the effect of the market upon the ultimate outcome in the coordination game. This research provides insights into both equilibrium selection and the application of prediction markets within organizations as a decision support tool. (Prediction Markets; Experimental Economics; Coordination Games)
منابع مشابه
Equilibrium in competitive insurance markets with ex ante adverse selection and ex post moral hazard
Existence of pure strategy equilibria is studied in health insurance markets that exhibit both ex ante adverse selection of the Rothschild–Stiglitz–Wilson type, and ex post hidden information moral hazard. It is found that ex post moral hazard has two offsetting effects on the existence of equilibrium, and that in general it is difficult to say whether an equilibrium is more or less likely to e...
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We examine the effectiveness of asset markets when the final outcome upon which the asset payout is based maybe affected by the unobservable actions of the traders. Players participate in a minimum effort coordination game preceeded by an information market where the asset payoffs are determined by the observed minimum effort level in the subsequent game. We examine both the informativeness of ...
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