Screening equilibria in experimental markets |
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| Authors: | Lisa L Posey Abdullah Yavas |
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| Institution: | (1) Penn State University, Business Building, University Park, PA 16802, USA |
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| Abstract: | We conduct an experimental test of a screening model of an insurance market with asymmetric information. We first conduct
three sessions in which the proportion of high risk buyers is such that a separating equilibrium should exist. We then conduct
three more sessions in which the only change we make is decreasing the proportion of high risks such that the equilibrium
is now a pooling equilibrium. In both treatments, the observed behavior converges to the equilibrium prediction.
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| Keywords: | Screening equilibrium Experiments |
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