This paper empirically examines the adverse selection models by using the data from China’s personal automobile insurance market through the standard positive-correlation test. Results show that higher-risk insurance policyholders do tend to buy insurance with a lower coinsurance rate, which...

Purpose – The paper aims to test the rational‐expectations hypothesis using data from the Chinese stock market. Design/methodology/approach – The rational‐expectations hypothesis plays a critical role in economic and financial studies. However, it is unclear whether this hypothesis is...

Purpose – The paper aims to test the rational-expectations hypothesis using data from the Chinese stock market. Design/methodology/approach – The rational-expectations hypothesis plays a critical role in economic and financial studies. However, it is unclear whether this hypothesis is...

Purpose – The paper aims to test the rational-expectations hypothesis using data from the Chinese stock market. Design/methodology/approach – The rational-expectations hypothesis plays a critical role in economic and financial studies. However, it is unclear whether this hypothesis is...

This paper introduces uncertainty regarding the proportion of informed traders in a rational expectation equilibrium model with asymmetric information. The proportion uncertainty dramatically changes the properties of the resulting equilibrium. First, it may generate multiple nonlinear rational...

Purpose – The purpose of this two‐part series is to consider the role of the “scientific method” (SM) in human understanding, questioning both its consistency in actual practice and its reasonableness as a system of philosophy and action. Design/methodology/approach – Part 2 considers...