Adverse Selection and Endogenous Information by João Thereze

Join us for another event in the Microeconomics Research Seminar Series, Spring Term 2024.

João Thereze, from the Fuqua School of Business at Duke University, will present their research on Adverse Selection and Endogenous Information.

Abstract

This paper studies adverse selection markets in which consumers can choose to learn how much they value a product. Information acquisition presents a trade-off: it increases the quality of consumers’ choices but worsens selection. We show that market efficiency is often non-monotonic in information costs, and that information decisions produce a negative externality, which may lead to new forms of market breakdown. Moreover, we prove that standard metrics used in the literature underestimate the welfare effects of adverse selection under endogenous information.

Finally, we characterize the empirical content of the model and develop a framework for counterfactual policy analysis.

This seminar will be held in the Economics Common Room on Monday 26 February 2024 at 1.30pm. 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.