The Times They Are A-Changing: Experimenting with Dynamic Adverse Selection

B-Tier
Journal: American Economic Journal: Microeconomics
Year: 2021
Volume: 13
Issue: 4
Pages: 1-22

Authors (3)

Felipe A. Araujo (not in RePEc) Stephanie W. Wang (not in RePEc) Alistair J. Wilson (University of Pittsburgh)

Score contribution per author:

0.670 = (α=2.01 / 3 authors) × 1.0x B-tier

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

Abstract

We examine a common value dynamic matching environment where adverse selection accrues slowly over time. Theoretical best responses are therefore time varying, and the prior experimental literature suggests that sequential environments might lead to greater understanding of adverse selection in this dynamic setting. However, while a sophisticated minority in our experiment do condition on time and are close to a best response, the majority use a stationary response, even after extended experience. In an environment with persistent uncertainty, our results indicate that sequentiality is insufficient for the large majority of participants to recognize the effects of adverse selection.

Technical Details

RePEc Handle
repec:aea:aejmic:v:13:y:2021:i:4:p:1-22
Journal Field
General
Author Count
3
Added to Database
2026-01-29