The paper explains how workers' expectations of being discriminated against can be self-confirming, accounting for the persistence of unequal outcomes in the labour market even beyond the causes that originally generated them. The theoretical framework used is a two-stage game of incomplete...

A standard hidden information model is considered to study the influence of the a priori productivity distribution on the optimal contract. A priori more productive (hazard rate dominant) agents work less, enjoy lower rents, but generate a higher expected surplus.

A standard hidden information model is considered to study the influence of the a priori productivity distribution on the optimal contract. A priori more productive (hazard rate dominant) agents work less, enjoy lower rents, but generate a higher expected surplus.

The paper explains how workers' expectations of being discriminated against can be self-confirming, accounting for the persistence of unequal outcomes in the labour market even beyond the causes that originally generated them. The theoretical framework used is a two-stage game of incomplete...

Rothschild and Stiglitz (1976) show that there need not exist a competitive equilibrium in markets with adverse selection. Building on their framework we demonstrate that externalities between agents - an agent's utility upon accepting a contract depends on the average type attracted by the...

Using several microeconomic data sets from the United States and the Netherlands, and the examples of height and beauty, this study examines whether: 1) Absolute or relative differences in a characteristic are what affect labor-market and other outcomes; and 2) The effects of a characteristic...