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| Tekijä: | Riley, J.G. |
| Otsikko: | Weak and strong signals |
| Lehti: | Scandinavian Journal of Economics
2002 : JUN, VOL. 104:2, p. 213-236 |
| Asiasana: | Economists Microeconomics Economic theory Adverse selection Models Insurance Companies USA |
| Kieli: | eng |
| Tiivistelmä: | Akerlöf, Spence and Stiglitz showed that competitive markets can perform very poorly in the presence of informational asymmetry. It is shown that if there is a signaling technology which is sufficiently strong (i.e. the marginal cost of signaling declines sufficiently rapidly with quality) the cost of sorting is low and a national equilibrium exists. Empirically testable necessary and sufficient conditions for existence are derived. In addition, it is shown that if Akerlovian participation constraints are added to a signaling model there is a minimum signaling threshold. |
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