Imperfect information transmission and adverse selection in asset markets

A-Tier
Journal: Journal of Economic Theory
Year: 2018
Volume: 176
Issue: C
Pages: 619-649

Score contribution per author:

4.036 = (α=2.02 / 1 authors) × 2.0x A-tier

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

Abstract

This paper studies asset markets where owners of assets do not inherit private information from previous owners after a transaction and must learn about asset quality over time. Instantaneous learning by owners maximizes the number of owners with private information, but also maximizes the trading volume and welfare. This result is contrary to the traditional view that information asymmetry hurts trade efficiency. Public disclosure of information is not always optimal and its welfare implication depends crucially on the source of gains from trade.

Technical Details

RePEc Handle
repec:eee:jetheo:v:176:y:2018:i:c:p:619-649
Journal Field
Theory
Author Count
1
Added to Database
2026-01-25