Signaling in markets with two-sided adverse selection

Douglas Gale

    Research output: Contribution to journalArticle

    Abstract

    The paper analyzes an economy with two-sided adverse selection, focusing on equilibria that satisfy a refinement based on the notion of strategic stability. In the familiar case of one-sided adverse selection, agents reveal all of their private information as long as the contract space is rich enough. However, with two-sided adverse selection, the sufficient conditions for separation are much stronger.

    Original languageEnglish (US)
    Pages (from-to)391-414
    Number of pages24
    JournalEconomic Theory
    Volume18
    Issue number2
    DOIs
    StatePublished - Jan 1 2001

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    Keywords

    • Adverse selection
    • Equilibrium
    • Markets
    • Rationing
    • Refinement
    • Signaling
    • Strategic stability
    • Types
    • Walrasian

    ASJC Scopus subject areas

    • Economics and Econometrics

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