Gemmo, Irina Kubitza, Christian Rothschild, Casey G.
Year of Publication:
ICIR Working Paper Series 32/18
We prove the existence of an equilibrium in competitive markets with adverse selection in the sense of Miyazaki (1977), Wilson (1977), and Spence (1978) when the distribution of unobservable risk types is continuous. Our proof leverages the finite-type proof in Spence (1978) and a limiting argument akin to Hellwig (2007)'s study of optimal taxation.
asymmetric and private information insurance market adverse selection equilibrium