Screening equilibria in experimental markets

Lisa L. Posey, Abdullah Yavas

Research output: Contribution to journalArticle

8 Scopus citations

Abstract

We conduct an experimental test of a screening model of an insurance market with asymmetric information. We first conduct three sessions in which the proportion of high risk buyers is such that a separating equilibrium should exist. We then conduct three more sessions in which the only change we make is decreasing the proportion of high risks such that the equilibrium is now a pooling equilibrium. In both treatments, the observed behavior converges to the equilibrium prediction.

Original languageEnglish (US)
Pages (from-to)147-167
Number of pages21
JournalGENEVA Risk and Insurance Review
Volume32
Issue number2
DOIs
StatePublished - Dec 1 2007

All Science Journal Classification (ASJC) codes

  • Accounting
  • Business, Management and Accounting (miscellaneous)
  • Finance
  • Economics and Econometrics

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