Worker mobility is necessary for the efficient operation of the labor market, so that the best matches can be found between workers and employers. Employers have only limited information about the abilities of each prospective worker, however. When making hiring decisions, they take the chance of employing a worker who does not have the skills (and thus the productivity) that was originally exp...

This set of lecture notes covers a general model of adverse selection as well as a leading example— that of a price discriminating monopolist— due to Maskin and Riley (1984). At the end of this unit, students should understand the application of the revelation principal to this class of models, the general solution techniques, and the key economic trade-o¤— e¢ ciency versus information rent sav...

This paper considers a firm whose potential employees have private information on both their productivity and the extent of their fairness concerns. Fairness is modelled as inequity aversion, where fair-minded workers suffer if their colleagues get more income net of production costs. Screening workers with equal productivity but different fairness concerns is shown to be impossible if both typ...

In this paper, I study the nonparametric identification of a multidimensional adverse selection model. In particular, I consider the screening model of Rochet and Choné (1998), where products have multiple characteristics and consumers have private information about their multidimensional taste for these characteristics, and determine the data features and additional condition(s) that identify ...

In many long-term relationships, parties may be reluctant to reveal their private information in order to benefit from their informational advantage in the future. We point out that the strategic use of debt by an uninformed party induces another party to reveal private information. Our argument, which is consistent with casual observation, is based on the idea that (renegotiable) debt is a cre...

This article investigates whether the contractual exclusion of third-party extended warranties should be legally permissible, using a model incorporating consumer heterogeneity. The welfare effects of competition in the market for extended warranties are shown to depend on the degree of competition in the product market. In contrast to the approach typically adopted by the courts, the article a...

This paper considers a market with adverse selection in the spirit of Rothschild and Stiglitz (Quart. J. Econ. 90 (1976) 629). The major departure from existing approaches is that we model a decentralized market that is open-ended and constantly refilled by new participants, e.g., by new workers and firms in the case of a labor market. The major novelty of this approach is that the distribution...

Data from a survey conducted in 1981 on a national sample of 5508 births in France were used to analyse the role of a history of previous adverse pregnancy outcome (spontaneous abortion, perinatal death or adverse fetal condition) in the selection mechanisms of women with regard to occupational activity, and the impact on the relation between work and preterm delivery. The study, carried out se...