Randomization with Asymmetric Information a Simplified Exposition

Richard Arnott and Joseph Stiglitz

Working Paper from Economics Department, Queen's University

Abstract: A series of recent papers investigated the desirability of randomization of insurance contracts in the presence of moral hazard. All treat a continuum of possible outcomes, which tends to obscure the intuition. In this paper, we treat the two-outcome case, employing derivations which highlight the intuition. We also discuss randomization with adverse selection.

Pages: 15 pages
Date: 1985
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Citations: View citations in EconPapers (2)

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Persistent link: https://EconPapers.repec.org/RePEc:qed:wpaper:594

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