Advanced Search
MyIDEAS: Login to save this article or follow this journal

Equilibrium, Adverse Selection, and Statistical Distributions

Contents:

Author Info

  • Helton Saulo

    ()
    (Department of Economics - Federal University of Rio Grande do Sul / Porto Alegre, RS, Brazil)

  • Jeremias Leao

    ()
    (Department of Mathematics - Federal University of Piaui / Picos, PI, Brazil)

Registered author(s):

    Abstract

    This paper addresses the problem of multiple equilibria in markets with adverse selection. Akerlof (1970) identified an unique equilibrium of the total market failure under adverse selection. Posterioly, Wilson (1979, 1980) argued that the presence of adverse selection may lead to multiple equilibria. In particular, this paper extends the work of Rose (1993), who stated that the existence of multiple equilibria depends on the distribution of quality. Rose found that multiple equilibria are highly unlikely for most standard probability distributions. This work considers additional statistical distributions for quality. The simulation results suggest the existence of multiple equilibria when the quality follows a beta normal distribution.

    Download Info

    If you experience problems downloading a file, check if you have the proper application to view it first. In case of further problems read the IDEAS help page. Note that these files are not on the IDEAS site. Please be patient as the files may be large.
    File URL: http://www.accessecon.com/Pubs/EB/2011/Volume31/EB-11-V31-I3-P186.pdf
    Download Restriction: no

    Bibliographic Info

    Article provided by AccessEcon in its journal Economics Bulletin.

    Volume (Year): 31 (2011)
    Issue (Month): 3 ()
    Pages: 2066-2074

    as in new window
    Handle: RePEc:ebl:ecbull:eb-11-00178

    Contact details of provider:

    Related research

    Keywords: Adverse Selection; Multiple Equilibria; Statistical Distributions; Akerlof-Wilson Model.;

    Find related papers by JEL classification:

    References

    References listed on IDEAS
    Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.:
    as in new window
    1. Panu Poutvaara & Andreas Wagener, 2004. "The Invisible Hand Plays Dice: Eventualities in Religious Markets," CESifo Working Paper Series, CESifo Group Munich 1238, CESifo Group Munich.
    Full references (including those not matched with items on IDEAS)

    Citations

    Lists

    This item is not listed on Wikipedia, on a reading list or among the top items on IDEAS.

    Statistics

    Access and download statistics

    Corrections

    When requesting a correction, please mention this item's handle: RePEc:ebl:ecbull:eb-11-00178. See general information about how to correct material in RePEc.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: (John P. Conley).

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    If references are entirely missing, you can add them using this form.

    If the full references list an item that is present in RePEc, but the system did not link to it, you can help with this form.

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your profile, as there may be some citations waiting for confirmation.

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.