Asymmetric Information and Adverse Selection in Mauritian Slave Auctions
56 Pages Posted: 8 Dec 2008
Date Written: October 1, 2008
Abstract
Information asymmetry is a necessary prerequisite for testing adverse selection. This paper applies this sequence of tests to Mauritian slave auctions. Dynamic auction theory with private value highlights more aggressive bidding by uninformed bidders and higher prices when an informed participant is active. We conjecture that observable family links between buyer and seller entailed superior information and find a strong price premium when a related buyer purchased a slave, indicative of information asymmetry. We then test for adverse selection using sale motivation. Our results indicate large discounts on voluntary as compared to involuntary sales. Consistent with adverse selection, the market anticipated that predominantly low-productivity slaves would be brought to the market in voluntary sales.
Keywords: Information Asymmetry, Adverse Selection, English Auction, Private Value, Slavery, Mauritius
JEL Classification: D82, N37
Suggested Citation: Suggested Citation
Do you have negative results from your research you’d like to share?
Recommended Papers
-
Adverse Selection in Insurance Markets: Policyholder Evidence from the U.K. Annuity Market
By Amy Finkelstein and James M. Poterba
-
Estimating Risk Preferences from Deductible Choice
By Alma Cohen and Liran Einav
-
Estimating Risk Preferences from Deductible Choice
By Alma Cohen and Liran Einav
-
The Role of Commitment in Dynamic Contracts: Evidence from Life Insurance
By Igal Hendel and Alessandro Lizzeri
-
Asymmetric Information and Learning: Evidence from the Automobile Insurance Market
By Alma Cohen
-
Private Information and its Effect on Market Equilibrium: New Evidence from Long-Term Care Insurance
-
The Interaction of Public and Private Insurance: Medicaid and the Long-Term Care Insurance Market
By Jeffrey R. Brown and Amy Finkelstein
-
The Interaction of Public and Private Insurance: Medicaid and the Long-Term Care Insurance Market
By Jeffrey R. Brown and Amy Finkelstein
-
Sources of Advantageous Selection: Evidence from the Medigap Insurance Market
By Hanming Fang, Michael P. Keane, ...
-
Sources of Advantageous Selection: Evidence from the Medigap Insurance Market
By Hanming Fang, Michael P. Keane, ...