Randomization with Asymmetric Information

Richard Arnott and Joseph Stiglitz

RAND Journal of Economics, 1988, vol. 19, issue 3, 344-362

Abstract: It is by now well known that, in the presence of moral hazard or adverse selection, randomization of insurance premiums and benefits may be Pareto efficient. This article provides a typology of the various forms that randomization may take, derives necessary or sufficient conditions for the desirability of these various forms of randomization, obtains some single characterization theorems of the efficient random policies, gives some intuition behind the results, and considers why randomization appears to occur less often in practice than the theory suggests it should.

Date: 1988
References: Add references at CitEc
Citations: View citations in EconPapers (105)

Downloads: (external link)
http://links.jstor.org/sici?sici=0741-6261%2819882 ... O%3B2-3&origin=repec full text (application/pdf)
Access to full text is restricted to JSTOR subscribers. See http://www.jstor.org for details.

Related works:
Working Paper: Randomization with Asymmetric Information (2010)
Working Paper: Randomization with Asymmetric Information (1988)
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:rje:randje:v:19:y:1988:i:autumn:p:344-362

Ordering information: This journal article can be ordered from
https://editorialexp ... i-bin/rje_online.cgi

Access Statistics for this article

More articles in RAND Journal of Economics from The RAND Corporation
Bibliographic data for series maintained by ().