On Rothschild-Stiglitz as competitive pooling
Alberto Martin
Economics Working Papers from Department of Economics and Business, Universitat Pompeu Fabra
Abstract:
Dubey and Geanakoplos [2002] have developed a theory of competitive pooling, which incorporates adverse selection and signaling into general equilibrium. By recasting the Rothschild-Stiglitz model of insurance in this framework, they find that a separating equilibrium always exists and is unique. We prove that their uniqueness result is not a consequence of the framework, but rather of their definition of refined equilibria. When other types of perturbations are used, the model allows for many pooling allocations to be supported as such: in particular, this is the case for pooling allocations that Pareto dominate the separating equilibrium.
Keywords: Competitive pooling; insurance; adverse selection; signalling; refined equilibrium; separating equilibrium (search for similar items in EconPapers)
JEL-codes: D4 D41 D5 D52 D81 D82 (search for similar items in EconPapers)
Date: 2003-08, Revised 2006-01
New Economics Papers: this item is included in nep-ias and nep-mic
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Citations: View citations in EconPapers (3)
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Related works:
Journal Article: On Rothschild–Stiglitz as Competitive Pooling (2007)
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Persistent link: https://EconPapers.repec.org/RePEc:upf:upfgen:917
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