Transparency and Distressed Sales under Asymmetric Information

William Fuchs, Aniko Öry and Andrzej Skrzypacz

No 1986, Cowles Foundation Discussion Papers from Cowles Foundation for Research in Economics, Yale University

Abstract: We analyze price transparency in a dynamic market with private information and correlated values. Uninformed buyers compete inter- and intra-temporarily for a good sold by an informed seller suffering a liquidity shock. We contrast public versus private price offers. In a two-period case all equilibria with private offers have more trade than any equilibrium with public offers; under some additional conditions we show Pareto-dominance of the private-offers equilibria. If a failure to trade by the deadline results in an efficiency loss, public offers can induce a market breakdown before the deadline, while trade never stops with private offers.

Keywords: Adverse selection; Transparency; Distress; Market design; Volume (search for similar items in EconPapers)
JEL-codes: D82 G14 G18 (search for similar items in EconPapers)
Pages: 42 pages
Date: 2015-02
New Economics Papers: this item is included in nep-com and nep-mic
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Citations: View citations in EconPapers (9)

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Related works:
Journal Article: Transparency and distressed sales under asymmetric information (2016)
Working Paper: Transparency and Distressed Sales under Asymmetric Information (2015)
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