Title

Equity and adverse selection

Authors

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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