Genesis of market failure of adverse-selection-type in problem of effective capital allocation
AbstractThe paper investigates the problem of possibility of investment allocation by economies according to adverse pattern, which can ultimately imply the rise of situation of market failure. We consider the transformation of “ideal” capital allocation into allocation of adverse-selection-type, which occurs as a result of migration of agents of different types. We conclude that the uncontrolled agents’ behavior, due to their bounded rationality, can lead to adverse selection state, when the less effective agents are investors in economies with most favorable investment climate, and vice versa.
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Bibliographic InfoPaper provided by University Library of Munich, Germany in its series MPRA Paper with number 41868.
Date of creation: 2012
Date of revision:
capital allocation; adverse selection; market failure; behavior of agents; maximizes; satisfiers;
Find related papers by JEL classification:
- D03 - Microeconomics - - General - - - Behavioral Microeconomics; Underlying Principles
- E22 - Macroeconomics and Monetary Economics - - Consumption, Saving, Production, Employment, and Investment - - - Capital; Investment; Capacity
This paper has been announced in the following NEP Reports:
- NEP-ALL-2012-10-20 (All new papers)
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