Adverse selection, seller effort, and selection bias.

From: Southern Economic Journal | Date: July 1, 2006| Author: Wimmer, Bradley S.; Chezum, Brian | Copyright information

1. Introduction

Researchers use several approaches to identify adverse selection. (1) Genesove (1993) tests the proposition that, in a lemons market, prices inversely relate with observable seller characteristics that correlate with seller incentives to select goods adversely. Genesove examines the proposition in used automobile auctions. Chezum and Wimmer (1997) examine the proposition in thoroughbred racehorse markets, arguing that sellers with a high propensity to rac...

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