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What are the welfare effects of a policy that facilitates for insurance customers to privately and covertly learn about their accident risks? We endogenize the information structure in Stiglitz's classic monopoly insurance model. We first show that his results are robust: For a small information...
Persistent link: https://www.econbiz.de/10011083449
We study a monopoly insurance model with endogenous information acquisition. Through a continuous effort choice, consumers can determine the precision of a privately observed signal that is informative about their accident risk. The equilibrium effort is, depending on parameter values, either...
Persistent link: https://www.econbiz.de/10011084544
cornerstone of contract theory. We have conducted an experiment with 720 participants to explore whether the theoretical insights … are reflected by the behavior of subjects in the laboratory and to what extent deviations from standard theory can be … agency theory is indeed useful to qualitatively predict how variations in the degree of uncertainty affect subjects' behavior …
Persistent link: https://www.econbiz.de/10011084433
A central insight of agency theory is that when a principal offers a contract to a privately informed agent, the … particular, we investigate settings with both exogenous and endogenous information structures. We find that theory is indeed a …
Persistent link: https://www.econbiz.de/10005789080
equilibria of merger games with simultaneous and sequential moves. The application of our framework to specific oligopoly models …
Persistent link: https://www.econbiz.de/10005788984
Evidence suggests that unemployed individuals can sometimes affect their job prospects by undertaking a costly action like deciding to move or retrain. Realistically, such an opportunity only arises for some individuals and the identity of those may be unobservable ex-ante. The problem of...
Persistent link: https://www.econbiz.de/10005504238
We consider a competitive search model where firms with vacancies choose between posting a wage ex-ante and bargaining it with workers ex-post. Workers apply for vacancies after observing firms' wage setting decisions, and differ in some observable but not verifiable qualifications that affect...
Persistent link: https://www.econbiz.de/10005504658
Information asymmetries are important in theory but difficult to identify in practice. We estimate the presence and …
Persistent link: https://www.econbiz.de/10005497798
We analyze a game of two-sided private information characterized by extreme adverse selection, and study a special case in the laboratory. Each player has a privately known "strength" and can decide to fight or compromise. If either chooses to fight, there is a conflict; the stronger player...
Persistent link: https://www.econbiz.de/10005497885
Recent empirical work finds that surprisingly little variation in the demand for insurance is explained by heterogeneity in risks. I distinguish between heterogeneity in risk preferences and risk perceptions underlying the unexplained variation. Heterogeneous risk perceptions induce a systematic...
Persistent link: https://www.econbiz.de/10011083454