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Equity and Adverse Selection

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  • Ramarao Desiraju
  • David E. M. Sappington

Abstract

"We introduce concerns with inequity into the canonical adverse selection model. We find that aversion to ex post inequity is not constraining for the principal if the two agents are identical ex ante, but generally is constraining when the agents differ ex ante. Constraining equity concerns can lead to output levels that are either above or below standard levels, and can result in only one agent experiencing systematic inequity in equilibrium." Copyright 2007, The Author(s) Journal Compilation (c) 2007 Blackwell Publishing.

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Bibliographic Info

Article provided by Wiley Blackwell in its journal Journal of Economics & Management Strategy.

Volume (Year): 16 (2007)
Issue (Month): 2 (06)
Pages: 285-318

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Handle: RePEc:bla:jemstr:v:16:y:2007:i:2:p:285-318

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Web page: http://www.kellogg.northwestern.edu/research/journals/JEMS/

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Web: http://www.blackwellpublishing.com/journal.asp?ref=1058-6407&site=1

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Citations

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Cited by:
  1. Debashis Pal & Arup Bose & David Sappington, 2008. "Asymmetric Treatment of Identical Agents in Teams," University of Cincinnati, Economics Working Papers Series 2008-08, University of Cincinnati, Department of Economics.
  2. Siemens, Ferdinand von, 2005. "Fairness, Adverse Selection, and Employment Contracts," Discussion Paper Series of SFB/TR 15 Governance and the Efficiency of Economic Systems 58, Free University of Berlin, Humboldt University of Berlin, University of Bonn, University of Mannheim, University of Munich.
  3. Sabrina Teyssier, 2008. "Les Modes de Rémunération comme MécanismesSélectifs de la Main d'oeuvre : Fondements Théoriques et Estimations Empiriques," Post-Print halshs-00303703, HAL.
  4. Desiraju, Ramarao & Sappington, David E.M., 2007. "Equity and adverse selection with correlated costs," Economics Letters, Elsevier, vol. 95(3), pages 402-407, June.
  5. Dai, Chifeng, 2009. "The appeals process in principal-agent relationships," Journal of Economic Behavior & Organization, Elsevier, vol. 71(2), pages 451-462, August.
  6. Dominik Erharter, 2012. "Credence goods markets, distributional preferences and the role of institutions," Working Papers 2012-11, Faculty of Economics and Statistics, University of Innsbruck.
  7. Felix Bierbrauer & Nick Netzer, 2012. "Mechanism Design and Intentions," Working Paper Series in Economics 53, University of Cologne, Department of Economics, revised 21 Aug 2012.
  8. Dominik Erharter, 2013. "Screening Experts' Distributional Preferences," Working Papers 2013-27, Faculty of Economics and Statistics, University of Innsbruck.
  9. David, Gill & Rebecca, Stone, 2012. "Desert and inequity aversion in teams," MPRA Paper 36864, University Library of Munich, Germany.
  10. Claude Ménard & Jean-Michel Oudot, 2010. "Opportunisme ou équité ? Le cas des contrats d'approvisionnement de défense," Université Paris1 Panthéon-Sorbonne (Post-Print and Working Papers) halshs-00624280, HAL.
  11. Markus Goebel & Rick Vogel & Christiana Weber, 2013. "Management Research on Reciprocity: A Review of the Literature," BuR - Business Research, German Academic Association for Business Research, vol. 6(1), pages 34-53, May.
  12. repec:hal:journl:halshs-00624280 is not listed on IDEAS
  13. Doruk İriş & Luís Santos-Pinto, 2014. "Experimental Cournot oligopoly and inequity aversion," Theory and Decision, Springer, vol. 76(1), pages 31-45, January.

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