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Uninformed Winners Under Adverse Selection

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  • Max Blouin

Abstract

This paper presents a static model of a market for a quality-differentiated good. In one version quality is observable, in the other it is not. It is shown that some agents who are uninformed when quality is unobservable may have higher utility than they do when it is observable. This is more likely to happen when goods of intermediate quality are scarce.

Suggested Citation

  • Max Blouin, 2004. "Uninformed Winners Under Adverse Selection," Cahiers de recherche 0431, CIRPEE.
    • Handle: RePEc:lvl:lacicr:0431
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    File URL: http://www.cirpee.org/fileadmin/documents/Cahiers_2004/CIRPEE04-31.pdf
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    References listed on IDEAS

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    1. George A. Akerlof, 1970. "The Market for "Lemons": Quality Uncertainty and the Market Mechanism," The Quarterly Journal of Economics, President and Fellows of Harvard College, vol. 84(3), pages 488-500.
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    More about this item

    Keywords

    Adverse selection; uninformed agents;

    JEL classification:

    • D82 - Microeconomics - - Information, Knowledge, and Uncertainty - - - Asymmetric and Private Information; Mechanism Design

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