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Countervailing incentives in adverse selection models. A synthesis

Author

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  • Aguirre Pérez, Iñaki
  • Beitia Ruiz de Mendarozqueta, María Aranzazu

Abstract

In this paper we propose a simple method of characterizing countervailing incentives in adverse selection problems. The key element in our characterization consists of analyzing properties of the full information problem. This allows solving the principal problem without using optimal control theory. Our methodology can also be applied to different economic settings: health economics, monopoly regulation, labour contracts, limited liabilities and environmental regulation.

Suggested Citation

  • Aguirre Pérez, Iñaki & Beitia Ruiz de Mendarozqueta, María Aranzazu, 2014. "Countervailing incentives in adverse selection models. A synthesis," IKERLANAK Ikerlanak;2014-84, Universidad del País Vasco - Departamento de Fundamentos del Análisis Económico I.
  • Handle: RePEc:ehu:ikerla:14765
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    File URL: https://addi.ehu.es/handle/10810/14765
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    References listed on IDEAS

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    More about this item

    Keywords

    adverse selection; countervailing incentives;

    JEL classification:

    • D82 - Microeconomics - - Information, Knowledge, and Uncertainty - - - Asymmetric and Private Information; Mechanism Design
    • L50 - Industrial Organization - - Regulation and Industrial Policy - - - General

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