We introduce uncertainty into Holmstrom and Milgrom (1987) to study optimal long-term contracting with learning. In a dynamic relationship, the agent's shirking not only reduces current performance but also increases the agent’s information rent due to the persistent belief manipulation...

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...

What drives information asymmetry? What’s the relationship between information asymmetry and competitiveness? Based on a large dataset of China’s automobile insurance market, we find solid evidence of the existence of asymmetric information in China’s automobile insurance market according...