Markets with Multidimensional Private Information

Veronica Guerrieri and Robert Shimer

No 20623, NBER Working Papers from National Bureau of Economic Research, Inc

Abstract: This paper explores price formation when sellers are privately informed about their preferences and the quality of their asset. There are many equilibria, including a semi- separating one in which each seller's price depends on a one-dimensional index of her preferences and asset quality. This multiplicity does not rely on off-the-equilibrium path beliefs and so is not amenable to standard signaling game refinements. The semi- separating equilibrium may be not Pareto efficient, even if it is not Pareto dominated by any other equilibrium. Instead, efficient allocations may require transfers across uninformed buyers, inconsistent with any equilibrium.

JEL-codes: D82 G12 (search for similar items in EconPapers)
Date: 2014-10
New Economics Papers: this item is included in nep-cta, nep-mic and nep-mst
Note: AP EFG
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (6)

Published as Veronica Guerrieri & Robert Shimer, 2018. "Markets with Multidimensional Private Information," American Economic Journal: Microeconomics, vol 10(2), pages 250-274.

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Related works:
Journal Article: Markets with Multidimensional Private Information (2018)
Working Paper: Markets with Multidimensional Private Information (2013)
Working Paper: Markets with Multidimensional Private Information (2012)
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