Working Paper: NBER ID: w29039
Authors: Liran Einav; Amy Finkelstein; Neale Mahoney
Abstract: This is an invited chapter for the forthcoming Volume 4 of the Handbook of Industrial Organization. We focus on "selection markets," which cover markets in which consumers vary not only in how much they are willing to pay for a product but also in how costly they are to the seller. The chapter tries to organize the recent wave of IO-related papers on selection markets, which has largely focused on insurance and credit markets. We provide a common framework, terminology, and notation that can be used to understand many of these papers, and that we hope can be usefully applied going forward.
Keywords: Selection Markets; Insurance; Credit Markets; Adverse Selection
JEL Codes: G22; L00; L13
Edges that are evidenced by causal inference methods are in orange, and the rest are in light blue.
| Cause | Effect |
|---|---|
| higher consumer risk (D18) | higher costs for insurers (G52) |
| adverse selection (D82) | market inefficiency (G14) |