Much of the extensive empirical literature on insurance markets hasfocused on whether adverse selection can be detected. Once detected, however, therehas been little attempt to quantify its welfare cost, or to assess whether and whatpotential government interventions may reduce these costs. To...

We present new evidence on consumer liquidity constraints and the credit market conditions that might give rise to them. Our analysis is based on unique data from a large auto sales company that serves the subprime market. We first document the role of short-term liquidity in driving purchasing...

Much of the extensive empirical literature on insurance markets has focused on whether adverse selection can be detected. Once detected, however, there has been little attempt to quantify its importance. We start by showing theoretically that the efficiency cost of adverse selection cannot be...