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Randomization with Asymmetric Information Author info | Abstract | Publisher info | Download info | Related research | Statistics Richard Arnott
Joseph E. Stiglitz
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It is by now well known that, in the presence of moral hazard or adverse selection, randomization of insurance premiums and benefits may be Pareto efficient. This article provides a typology of the various forms that randomization may take, derives necessary or sufficient conditions for the desirability of these various forms of randomization, obtains some single characterization theorems of the efficient random policies, gives some intuition behind the results, and considers why randomization appears to occur less often in practice than the theory suggests it should.
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Article provided by The RAND Corporation in its journal RAND Journal of Economics .
Volume (Year): 19 (1988)
Issue (Month): 3 (Autumn)
Pages: 344-362
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Handle: RePEc:rje:randje:v:19:y:1988:i:autumn:p:344-362Contact details of provider: Web page: http://www.rje.org
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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.: Rothschild, Michael & Stiglitz, Joseph E, 1976.
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