Equity and adverse selection

    Authors

    R. Desiraju;D. E. M. Sappington

    Comments

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    Abbreviated Journal Title

    J. Econ. Manage. Strategy

    Keywords

    SOCIAL UTILITY; FAIRNESS; PREFERENCES; RECIPROCITY; COMPETITION; ECONOMICS; INEQUITY; Economics; Management

    Abstract

    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 Title

    Journal of Economics & Management Strategy

    Volume

    16

    Issue/Number

    2

    Publication Date

    1-1-2007

    Document Type

    Article

    Language

    English

    First Page

    285

    Last Page

    318

    WOS Identifier

    WOS:000246432000002

    ISSN

    1058-6407

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