Evidence Disclosure in Competitive Markets by Peter Eso

Join us for another event in the Microeconomics Research Seminar Series, Spring Term 2023.

Peter Eso from Jesus College, University of Oxford, will present their research on Evidence Disclosure in Competitive Markets.

Abstract

We propose a model of a competitive market for a divisible good in which both buyer and seller may possess concealable hard information about a relevant state of nature. When an agent knows the state he or she can verifiably disclose it, but an absence of evidence cannot be proved. Agents endogenously determine which states to disclose and conceal, if informed. The price reflects this: it is set to maximize expected social surplus conditional on all available public information and does not necessarily clear the market. Under general conditions we establish the existence of an equilibrium consisting of disclosure rules, consistent beliefs, contingent market prices, supply and demand decisions. In an extended example we fully characterize these objects. As an agent becomes better able to discover concealable evidence he or she discloses a larger set of states. The other side of the market becomes more suspicious that unfavourable evidence is being concealed; the resulting pressure on the market price alters the optimal disclosure rule on both sides, and trade can be reduced even when prices do not change.

This seminar will be held in the Economics Common Room on Monday 13 March 2023 at 4pm. This event is open to all levels of study and is also open to the public.

To register your place and gain access to the webinar, please contact the seminar organisers.

This event is part of the Microeconomics Research Seminar Series.