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Asymmetric Information and Adverse Selection in Mauritian Slave Auctions

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Author Info

  • Georges DIONNE

    (HEC Montreal, CIRPEE and CIRRELT)

  • Pascal ST-AMOUR

    (University of Lausanne, Swiss Finance Institute, CIRANO and CIRPEE)

  • Desire VENCATACHELLUM

    (African Development Bank)

Abstract

Information asymmetry is a necessary prerequisite for testing adverse selection. This paper applies this sequence of tests to Mauritian slave auctions. Dynamic auction theory with private value highlights more aggressive bidding by uninformed bidders and higher prices when an informed participant is active. We conjecture that observable family links between buyer and seller entailed superior information and find a strong price premium when a related buyer purchased a slave, indicative of information asymmetry. We then test for adverse selection using sale motivation. Our results indicate large discounts on voluntary as compared to involuntary sales. Consistent with adverse selection, the market anticipated that predominantly lowproductivity slaves would be brought to the market in voluntary sales.

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Bibliographic Info

Paper provided by Swiss Finance Institute in its series Swiss Finance Institute Research Paper Series with number 08-40.

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Length: 56 pages
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Date of revision:
Handle: RePEc:chf:rpseri:rp0840

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Web page: http://www.SwissFinanceInstitute.ch
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Related research

Keywords: Information Asymmetry; Adverse Selection; English Auction; Private Value; Slavery; Mauritius.;

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Cited by:
  1. Georges Dionne, 2012. "The Empirical Measure of Information Problems with Emphasis on Insurance Fraud and Dynamic Data," Cahiers de recherche 1233, CIRPEE.
  2. Février, Philippe & Linnemer, Laurent & Visser, Michael, 2012. "Testing for asymmetric information in the viager market," Journal of Public Economics, Elsevier, vol. 96(1), pages 104-123.
  3. Georges Dionne & Nathalie Fombaron & Neil Doherty, 2012. "Adverse Selection in Insurance Contracting," Cahiers de recherche 1231, CIRPEE.
  4. Georges Dionnne & Pierre-Carl Michaud & Jean Pinquet, 2012. "A Review of Recent Theoretical and Empirical Analyses of Asymmetric Information in Road Safety and Automobile Insurance," Cahiers de recherche 1204, CIRPEE.
  5. Yamamoto, Shinichi & Yoneyama, Takau & Kwon, W. Jean, 2012. "An Experimental Study On Adverse Selection And Moral Hazard," Hitotsubashi Journal of commerce and management, Hitotsubashi University, vol. 46(1), pages 51-64, January.
  6. Carole Botton & Julien Fouquau, 2012. "Adjugé, Vendu...Assuré," Post-Print hal-00937902, HAL.
  7. Ciprian Matis & Eugenia Matis, 2013. "Asymmetric Information In Insurance Field: Some General Considerations," Annales Universitatis Apulensis Series Oeconomica, Faculty of Sciences, "1 Decembrie 1918" University, Alba Iulia, vol. 1(15), pages 17.

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