Equity and adverse selection
Abbreviated Journal Title
J. Econ. Manage. Strategy
SOCIAL UTILITY; FAIRNESS; PREFERENCES; RECIPROCITY; COMPETITION; ECONOMICS; INEQUITY; Economics; Management
We introduce concerns with inequity into the canonical adverse selection model. We find that aversion to ex post inequity is not constraining for the principal if the two agents are identical ex ante, but generally is constraining when the agents differ ex ante. Constraining equity concerns can lead to output levels that are either above or below standard levels, and can result in only one agent experiencing systematic inequity in equilibrium.
Journal of Economics & Management Strategy
"Equity and adverse selection" (2007). Faculty Bibliography 2000s. 7027.