Disclosure, welfare and adverse selection

• 成果类型: Article
• 署名作者: Pram, Kym
• 署名单位: Nevada System of Higher Education (NSHE); University of Nevada Reno
• 刊物名称: JOURNAL OF ECONOMIC THEORY
• ISSN/ISSBN: 0022-0531
• DOI: 10.1016/j.jet.2021.105327
• 发表日期: 2021
• 关键词: disclosure; adverse selection; mechanism design; privacy

摘要

I consider a broad class of economic environments where a principal contracts with an agent under adverse selection and the agent can credibly disclose information to the principal. I show that there is an equilibrium that interim Pareto dominates the equilibrium without evidence if and only if the optimal mechanism without evidence assigns the outside option to a set of types satisfying a 'gains from trade' property. The results apply to a range of economic environments including insurance markets, financial markets and goods markets with quality-based price discrimination. (c) 2021 Elsevier Inc. All rights reserved.