On Rothschild–Stiglitz as competitive pooling

Dubey and Geanakoplos (Q J Econ 117:1529–1570, 2002) have developed a theory of competitive pooling, which incorporates adverse selection and signaling into general equilibrium. By recasting the Rothschild–Stiglitz model of insurance in this framework, they find that a separating equilibrium always...

Full description

Saved in:
Bibliographic Details
Published in:Economic theory 2007-05, Vol.31 (2), p.371-386
Main Author: Martin, Alberto
Format: Article
Language:English
Subjects:
Adverse selection
Competition
Economic models
Economic theory
Endowment
Endowments
Equilibrium
Equilibrium theory
EXPOSITA NOTE
Family economics
Game theory
Households
Insurance
Insurance pools
Market equilibrium
Microeconomics
Modeling
Nash equilibrium
Poolings of interest
Risk theory
Signalling
Studies
Trade
Uniqueness
Citations: Items that this one cites
Items that cite this one
Online Access:Get full text
Tags: Add Tag
No Tags, Be the first to tag this record!
Description
Summary:Dubey and Geanakoplos (Q J Econ 117:1529–1570, 2002) have developed a theory of competitive pooling, which incorporates adverse selection and signaling into general equilibrium. By recasting the Rothschild–Stiglitz model of insurance in this framework, they find that a separating equilibrium always exists and is unique. We prove that their uniqueness result is not a consequence of the framework, but rather of their definition of refined equilibria. When other types of perturbations are used, the model allows for many pooling allocations to be supported as such: in particular, this is the case for pooling allocations that Pareto dominate the separating equilibrium.
ISSN:0938-2259
1432-0479
DOI:10.1007/s00199-006-0089-3