A GAME THEORETIC FOUNDATION OF COMPETITIVE EQUILIBRIA WITH ADVERSE SELECTION

• 成果类型: Article
• 署名作者: Netzer, Nick; Scheuer, Florian
• 署名单位: University of Zurich; Stanford University; National Bureau of Economic Research
• 刊物名称: INTERNATIONAL ECONOMIC REVIEW
• ISSN/ISSBN: 0020-6598
• DOI: 10.1111/iere.12054
• 发表日期: 2014
• 页码: 399-422
• 关键词: insurance markets; rothschild-stiglitz; pareto optima; large numbers; moral hazard; INFORMATION; RENEGOTIATION; economies; LAW

摘要

We construct an extensive form game that captures competitive markets with adverse selection. It allows firms to offer any finite set of contracts, so that cross-subsidization is not ruled out. Moreover, firms can withdraw from the market after initial contract offers have been observed. We show that a subgame perfect equilibrium always exists. In fact, when withdrawal is costless, the set of equilibrium outcomes may correspond to the entire set of feasible contracts. We then focus on robust equilibria that continue to exist for small withdrawal costs. We show that the Miyazaki-Wilson contracts are the unique robust equilibrium outcome.