An example of non-existence of Riley equilibrium in markets with adverse selection

• 成果类型: Article
• 署名作者: Azevedo, Eduardo M.; Gottlieb, Daniel
• 署名单位: Washington University (WUSTL)
• 刊物名称: GAMES AND ECONOMIC BEHAVIOR
• ISSN/ISSBN: 0899-8256
• DOI: 10.1016/j.geb.2019.04.007
• 发表日期: 2019
• 页码: 152-157
• 关键词: Adverse selection; equilibrium; insurance

摘要

Rothschild and Stiglitz (1976) proposed a model of a competitive market with adverse selection and showed that a (pure strategy) Nash equilibrium may not exist. Among the solutions proposed to deal with this problem, a particularly influential one is the notion of Riley (or reactive) equilibrium (Riley, 1979). We give an example that shows that a Riley equilibrium may not exist if consumers are not ordered. (C) 2019 Elsevier Inc. All rights reserved.