We characterize the optimal pricing and allocation of shares in the presence of distinct adverse selection problems. Some investors have private information at the time of the IPO and sell their shares in the after-market upon facing liquidity needs. Others learn their private interest in the...

We characterize optimal IPO design in the presence of distinct ad- verse selection problems - one affecting the IPO stage and one arising in the after-market. Allocating shares to an investor with superior information in the after-market depresses the share's value to less informed investors....

We characterize optimal IPO design in the distinct adverse selection problems: one affecting the IPO stage and one arising in the after-market. Allocating shares to an investor with superior information in the after-market depresses the share's value to less informed investors. However, because...

We analyze a model where irrational and rational traders exchange a risky asset with competitive market makers. Irrational traders misperceive the mean of prior information (optimistic/pessimistic bias), the variance of prior information (better/lower than average effect)and the variance of the...