Asymmetric Information and Adverse Selection in Mauritian Slave Auctions
AbstractInformation 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 InfoPaper provided by Swiss Finance Institute in its series Swiss Finance Institute Research Paper Series with number 08-40.
Length: 56 pages
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Information Asymmetry; Adverse Selection; English Auction; Private Value; Slavery; Mauritius.;
Other versions of this item:
- Georges Dionne & Pascal St-Amour & Désiré Vencatachellum, 2009. "Asymmetric Information and Adverse Selection in Mauritian Slave Auctions," Review of Economic Studies, Oxford University Press, vol. 76(4), pages 1269-1295.
- D82 - Microeconomics - - Information, Knowledge, and Uncertainty - - - Asymmetric and Private Information; Mechanism Design
- N37 - Economic History - - Labor and Consumers, Demography, Education, Health, Welfare, Income, Wealth, Religion, and Philanthropy - - - Africa; Oceania
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