Markets with Within-Type Adverse Selection†

• 成果类型: Article
• 署名作者: Nguyen, Anh; Tan, Teck Yong
• 署名单位: Carnegie Mellon University; University of Nebraska System; University of Nebraska Lincoln
• 刊物名称: AMERICAN ECONOMIC JOURNAL-MICROECONOMICS
• ISSN/ISSBN: 1945-7669
• DOI: 10.1257/mic.20210112
• 发表日期: 2023
• 页码: 699-726
• 关键词: insurance markets; INFORMATION; COMPETITION; monopoly

摘要

We study bilateral trade with a seller owning multiple units of a good, where each unit is of binary quality. The seller privately knows her type-defined by the number of lemons that she owns- and which units in her endowments are the lemons (within-type adverse selection). We characterize the set of informationally constrained Pareto optimal allocations and show that every such allocation must involve a trade characterized by a threshold lambda*, with types having less (more) than lambda* units of lemons selling only their lemons (selling their entire endowment). We provide condi-tions for a distribution shift that give Pareto-improving allocations. (JEL D82, D86, L15)