This paper revisits the problem of adverse selection in the insurance market of Rothschild and Stiglitz (1976). We propose a simple extension of the game-theoretic structure in Hellwig (1987) under which Nash-type strategic interaction between the informed customers and the uninformed firms...

This paper revisits the problem of adverse selection in the insurance market of Rothschild and Stiglitz (QJE, 1976). We propose a simple extension of the game-theoretic structure in Hellwig (EER, 1987) under which Nash-type strategic interaction between the informed customers and the uninformed...

In post-Unification Italy the cyclical movements of the economy largely reflected those in the production of durable goods. The engineering industry has been seen as one that transformed metal into machines: its metal consumption suggests that investment in machinery followed the Kuznets-cycle...

In Italy two censuses were taken in 1911: the usual demographic census, that contains labor-force data, and the first industrial census, that contains employment data. The two yield aggregate figures that are very far apart. The literature directly concerned with estimating industrial employment...

This paper presents the second-generation estimates for the Italian engineering industry in 1911, a year documented both by the customary demographic census, and the first industrial census. The first part of this paper uses the census data to estimate the industry’s value added, sector...

In the literature the (Italian) engineering industry is seen as one that transformed metal into machines; its time path is inferred from that of its consumption of metal. Newly recovered evidence indicates that far more metal was turned into (traditional) hardware than into (modern) machines....

The financial crisis of 2007-08 has underscored the importance of adverse selection in financial markets. This friction has been mostly neglected by macroeconomic models of financial frictions, however, which have focused almost exclusively on the effects of limited pledgeability. In this paper,...

We propose a parsimonious model with adverse selection where delinquency, renegotiation, and bankruptcy all occur in equilibrium as a result of a simple screening mechanism. A borrower has private information about her cost of bankruptcy, and a lender may use random contracts to screen different...

This paper presents a theory in which risk-averse heterogeneously talented entrepreneurs are the key agents driving the process of development and modernisation. Entrepreneurial skills are private information, which prevents full risk sharing. In that setup, development to a modern industrial...