Doherty, Neil A.; Jung, Hong Joo - In: The Geneva Risk and Insurance Review 18 (1993) 2, pp. 173-182
With information asymmetry between contracting parties, adverse selection may result. A separation may be achieved if low-risk types can signal their identity—for example, by selecting from a menu of price-quantity contracts. In such models, signaling is costly and solutions are, at best,...