The Times They Are A-Changing: Experimenting with Dynamic Adverse Selection

Felipe A. Araujo, Stephanie W. Wang and Alistair Wilson

American Economic Journal: Microeconomics, 2021, vol. 13, issue 4, 1-22

Abstract: We examine a common value dynamic matching environment where adverse selection accrues slowly over time. Theoretical best responses are therefore time varying, and the prior experimental literature suggests that sequential environments might lead to greater understanding of adverse selection in this dynamic setting. However, while a sophisticated minority in our experiment do condition on time and are close to a best response, the majority use a stationary response, even after extended experience. In an environment with persistent uncertainty, our results indicate that sequentiality is insufficient for the large majority of participants to recognize the effects of adverse selection.

JEL-codes: C78 C92 D82 D91 (search for similar items in EconPapers)
Date: 2021
References: Add references at CitEc
Citations: View citations in EconPapers (4)

Downloads: (external link)
https://www.aeaweb.org/doi/10.1257/mic.20190088 (application/pdf)
https://doi.org/10.3886/E119467V1 (text/html)
https://www.aeaweb.org/doi/10.1257/mic.20190088.appx (application/pdf)
https://www.aeaweb.org/doi/10.1257/mic.20190088.ds (application/zip)
Access to full text is restricted to AEA members and institutional subscribers.

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:aea:aejmic:v:13:y:2021:i:4:p:1-22

Ordering information: This journal article can be ordered from
https://www.aeaweb.org/journals/subscriptions

DOI: 10.1257/mic.20190088

Access Statistics for this article

American Economic Journal: Microeconomics is currently edited by Johannes Hörner

More articles in American Economic Journal: Microeconomics from American Economic Association Contact information at EDIRC.
Bibliographic data for series maintained by Michael P. Albert ().