Wanda Mimra (ETH Zurich) on "Adverse Selection and Market Structure: An Experiment"

Speaker:  Wanda Mimra - ETH Zurich
  Monday, May 2, 2016 at 12:30 PM Polo Santa Marta, Via Cantarane 24, Stanza 1.59
The performance of markets with hidden information is of central importance in microeconomic theory. We present a large-scale experiment that distinguishes between two forms of hidden information, private and common values, and varies the contracting environment from bilateral contracting to non-exclusive competition. Our experimental results largely confirm theoretical predictions. Under private values, competition implements First Best trades. Under common values, the surplus when competition is exclusive is significantly higher than when competition is non-exclusive. Low types are excluded under nonexclusive competition, as under bilateral contracting, while those types are only distorted under exclusive competition.

Programme Director
Angelo Zago

Publication date
February 12, 2016