ChAsymmetricInformation(中级微观经济学清华大学,钟笑寒)解说.ppt

Chapter Thirty-Six Asymmetric Information Information in Competitive Markets In purely competitive markets all agents are fully informed about traded commodities and other aspects of the market. What about markets for medical services, or insurance, or used cars? Asymmetric Information in Markets A doctor knows more about medical services than does the buyer. An insurance buyer knows more about his riskiness than does the seller. A used car’s owner knows more about it than does a potential buyer. Asymmetric Information in Markets Imperfectly informed markets with one side better informed than the other are markets with asymmetric information. Asymmetric Information in Markets In what ways can asymmetric information affect the functioning of a market? Four applications will be considered: adverse selection moral hazard signaling incentives contracting. Adverse Selection Consider a used car market. 100 people want to sell their used cars and 100 want to buy a used car. Everyone knows 50 of the cars are “lemons” and 50 are “peaches”. The current owner of each car knows its quality, but the prospective buyers don’t know and given car’s quality. Each lemon seller will accept $1,000; a buyer will pay at most $1,200. Each peach seller will accept $2,000; a buyer will pay at most $2,400. Adverse Selection If every buyer can tell a peach from a lemon, then lemons sell for between $1,000 and $1,200, and peaches sell for between $2,000 and $2,400. Gains-to-trade are generated when buyers are well informed. Adverse Selection Suppose no buyer can tell a peach from a lemon before buying. What is the most a buyer will pay for any car? Adverse Selection In this case, the buyers have to guess about how much each car is worth. Since a car is equally likely to be a peach as a lemon, then a buyer would be willing to pay the expected value of the car, i.e, Adverse Selection But a peach seller cannot negotiate a price below $2000 and will exit the market. So all buyers know that re