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Market Equilibrium with Hidden Knowledge and Self-selection

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  • Engers, Maxim
  • Fernandez, Luis F

Abstract

The problem of the existence of a competitive equilibrium in models with hidden knowledge and self-knowledge has been discussed previously by M. Rothschild and J. E. Stiglitz_(1976), C. A. Wilson_(1977), and J. G. Riley_(1979). Recent analyses of such models by I. Cho and D. Kreps_(1986) and Riley argue for a particular outcome - the Pareto-dominant separating, zero-profit one. The authors prove the existence of such an outcome under very general conditions and, generalizing the reactive equilibrium concept introduced by Riley, they prove this outcome is the unique reactive equilibrium. Copyright 1987 by The Econometric Society.

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Bibliographic Info

Article provided by Econometric Society in its journal Econometrica.

Volume (Year): 55 (1987)
Issue (Month): 2 (March)
Pages: 425-39

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Handle: RePEc:ecm:emetrp:v:55:y:1987:i:2:p:425-39

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Cited by:
  1. Giuseppe De Feo & Jean Hindriks, 2009. "Harmful competition in the insurance markets," Working Papers 0921, University of Strathclyde Business School, Department of Economics.
  2. Barry Nalebuff & Andres Rodriguez & Joseph E. Stiglitz, 1993. "Equilibrium Unemployment as a Worker Screening Device," NBER Working Papers 4357, National Bureau of Economic Research, Inc.
  3. Strand,J., 2000. "Competitive effort and employment determination with team production," Memorandum 33/2000, Oslo University, Department of Economics.
  4. Giuseppe, DE FEO & Jean, HINDRIKS, 2005. "Efficiency of Competition in Insurance Markets with Adverse Selection," Discussion Papers (ECON - Département des Sciences Economiques) 2005042, Université catholique de Louvain, Département des Sciences Economiques.
  5. Van Tassel, Eric, 1999. "Group lending under asymmetric information," Journal of Development Economics, Elsevier, vol. 60(1), pages 3-25, October.
  6. Anjan V. Thakor & Gregory F. Udell, 2004. "An Economic Rationale for the Pricing Structure of Bank Loan Commitments," Finance 0411053, EconWPA.
  7. Theodoros M. Diasakos & Kostas Koufopoulos, . "Efficient Nash Equilibrium under Adverse Selection," Discussion Paper Series, Department of Economics 201313, Department of Economics, University of St. Andrews.
  8. Dan Anderberg, 1999. "Adverse selection, competition, and linear self-insurance," Finnish Economic Papers, Finnish Economic Association, vol. 12(1), pages 3-15, Spring.
  9. Smart, Michael, 2000. "Competitive Insurance Markets with Two Unobservables," International Economic Review, Department of Economics, University of Pennsylvania and Osaka University Institute of Social and Economic Research Association, vol. 41(1), pages 153-69, February.
  10. Hornig, Stephan O. & Rottmann, Horst & Wapler, Rüdiger, 2009. "Information asymmetry, education signals and the case of Ethnic and Native Germans," IAB Discussion Paper 200914, Institut für Arbeitsmarkt- und Berufsforschung (IAB), Nürnberg [Institute for Employment Research, Nuremberg, Germany].
  11. Benjamin R. Handel & Igal Hendel & Michael D. Whinston, 2013. "Equilibria in Health Exchanges: Adverse Selection vs. Reclassification Risk," NBER Working Papers 19399, National Bureau of Economic Research, Inc.
  12. Manelli, Alejandro M., 1997. "The Never-a-Weak-Best-Response Test in Infinite Signaling Games," Journal of Economic Theory, Elsevier, vol. 74(1), pages 152-173, May.
  13. Wanda Mimra & Achim Wambach, 2011. "A Game-Theoretic Foundation for the Wilson Equilibrium in Competitive Insurance Markets with Adverse Selection," CESifo Working Paper Series 3412, CESifo Group Munich.
  14. Pierre Picard, 2009. "Participating insurance contracts and the Rothschild-Stiglitz equilibrium puzzle," Working Papers hal-00413825, HAL.
  15. Alessio Emanuele BIONDO, 2011. "High-Tech Products and the Double Adverse Selection: Does Commercial Distribution Worsen Efficiency?," Journal of Knowledge Management, Economics and Information Technology, ScientificPapers.org, vol. 1(7), pages 18, December.

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