An example of non-existence of Riley equilibrium in markets with adverse selection

B-Tier
Journal: Games and Economic Behavior
Year: 2019
Volume: 116
Issue: C
Pages: 152-157

Score contribution per author:

1.005 = (α=2.01 / 2 authors) × 1.0x B-tier

α: calibrated so average coauthorship-adjusted count equals average raw count

Abstract

Rothschild and Stiglitz (1976) proposed a model of a competitive market with adverse selection and showed that a (pure strategy) Nash equilibrium may not exist. Among the solutions proposed to deal with this problem, a particularly influential one is the notion of Riley (or reactive) equilibrium (Riley, 1979). We give an example that shows that a Riley equilibrium may not exist if consumers are not ordered.

Technical Details

RePEc Handle
repec:eee:gamebe:v:116:y:2019:i:c:p:152-157
Journal Field
Theory
Author Count
2
Added to Database
2026-01-24