An example of non-existence of Riley equilibrium in markets with adverse selection

Azevedo, Eduardo M. and Gottlieb, Daniel (2019) An example of non-existence of Riley equilibrium in markets with adverse selection. Games and Economic Behavior. ISSN 0899-8256 (In Press)

Text (An Example of Non-Existence of Riley Equilibrium in Markets with Adverse Selection) - Accepted Version Pending embargo until 1 January 2100. Download (540kB) | Request a copy

Abstract

Rothschild and Stiglitz [1976] proposed a model of a competitive market with adverse selection and showed that a (pure strategy) Nash equilibrium may not exist. Among the solutions proposed to deal with this problem, a particularly influential one is the notion of Riley (or reactive) equilibrium [Riley, 1979]. We give an example that shows that a Riley equilibrium may not exist if consumers are not ordered.

Item Type:	Article
Official URL:	https://www.sciencedirect.com/journal/games-and-ec...
Divisions:	Management
Date Deposited:	18 Nov 2019 17:30
Last Modified:	08 Dec 2019 00:32
URI:	http://eprints.lse.ac.uk/id/eprint/102566

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