Hoppe, Eva I. and Schmitz, Patrick W. (2015). Do sellers offer menus of contracts to separate buyer types? An experimental test of adverse selection theory. Games Econ. Behav., 89. S. 17 - 34. SAN DIEGO: ACADEMIC PRESS INC ELSEVIER SCIENCE. ISSN 1090-2473

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Abstract

In the basic adverse selection model, a seller makes a contract offer to a privately informed buyer. A fundamental hypothesis of incentive theory is that the seller may want to offer a menu of contracts to separate the buyer types. In the good state of nature, total surplus is not different from the symmetric information benchmark, while in the bad state, private information may be welfare-reducing. We have conducted a laboratory experiment with 954 participants to test these hypotheses. While the results largely corroborate the theoretical predictions, we also find that private information may be welfare-enhancing in the good state. (C) 2014 The Authors.

Item Type: Journal Article
Creators:
CreatorsEmailORCIDORCID Put Code
Hoppe, Eva I.UNSPECIFIEDUNSPECIFIEDUNSPECIFIED
Schmitz, Patrick W.UNSPECIFIEDUNSPECIFIEDUNSPECIFIED
URN: urn:nbn:de:hbz:38-417107
DOI: 10.1016/j.geb.2014.11.001
Journal or Publication Title: Games Econ. Behav.
Volume: 89
Page Range: S. 17 - 34
Date: 2015
Publisher: ACADEMIC PRESS INC ELSEVIER SCIENCE
Place of Publication: SAN DIEGO
ISSN: 1090-2473
Language: English
Faculty: Unspecified
Divisions: Unspecified
Subjects: no entry
Uncontrolled Keywords:
KeywordsLanguage
INCOMPLETE INFORMATION; ULTIMATUM GAMES; BARGAINING BEHAVIOR; PROPERTY-RIGHTS; FAIRNESS; PREFERENCES; EQUILIBRIUM; INCENTIVES; MONOPOLY; MARKETSMultiple languages
EconomicsMultiple languages
URI: http://kups.ub.uni-koeln.de/id/eprint/41710

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