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Yamashita, Takuro
and Murooka, Takeshi
(2021)
A Note on Adverse Selection and Bounded Rationality.
TSE Working Paper, n. 21-1244, Toulouse
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Official URL : http://tse-fr.eu/pub/125926
Abstract
We consider an adverse selection environment between an informed seller and an uninformed buyer, where no trade occurs when all buyers are rational. The buyer may be a “behavioral” type in the sense that he may take actions different from a rational type. We show that, for any incentive-feasible mechanism with any non-trivial trade, the buyer’s ex-ante expected payoff is strictly negative. Our result implies that whenever trade occurs, some behavioral types must incur losses.
| Item Type: | Monograph (Working Paper) |
|---|---|
| Language: | English |
| Date: | September 2021 |
| Place of Publication: | Toulouse |
| Uncontrolled Keywords: | Adverse selection, Inferential naivety, Mechanism design, Behavioral contract theory, Consumer protection |
| JEL Classification: | D82 - Asymmetric and Private Information D89 - Other D90 - General D91 - Intertemporal Consumer Choice; Life Cycle Models and Saving |
| Subjects: | B- ECONOMIE ET FINANCE |
| Divisions: | TSE-R (Toulouse) |
| Institution: | Université Toulouse 1 Capitole |
| Site: | UT1 |
| Date Deposited: | 08 Sep 2021 08:45 |
| Last Modified: | 08 Sep 2021 08:45 |
| OAI Identifier: | oai:tse-fr.eu:125926 |
| URI: | https://publications.ut-capitole.fr/id/eprint/43799 |
