Disclosure, welfare and adverse selection

Kym Pram

Journal of Economic Theory, 2021, vol. 197, issue C

Abstract: 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.

Keywords: Disclosure; Adverse selection; Mechanism design; Privacy (search for similar items in EconPapers)
JEL-codes: D4 D42 D8 D82 (search for similar items in EconPapers)
Date: 2021
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (2)

Downloads: (external link)
http://www.sciencedirect.com/science/article/pii/S0022053121001447
Full text for ScienceDirect subscribers only

Related works:
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link: https://EconPapers.repec.org/RePEc:eee:jetheo:v:197:y:2021:i:c:s0022053121001447

DOI: 10.1016/j.jet.2021.105327

Access Statistics for this article

Journal of Economic Theory is currently edited by A. Lizzeri and K. Shell

More articles in Journal of Economic Theory from Elsevier
Bibliographic data for series maintained by Catherine Liu ().