On the Cost of Adverse Selection in Individual Annuity Markets: Evidence From Singapore

The paper provides a first analysis of market jump starting and its two-way interaction between mechanism design and participation constraints. The government optimally overpays for the legacy assets and cleans up the market of its weakest assets, through a mixture of buybacks and equity injections, and leaves the firms with the strongest legacy assets to the market. The government reduces adverse selection enough to let the market rebound, but not too much, so as to limit the cost of intervention. The existence of a market imposes no welfare cost. (JEL D82, D83, G01, G31, H81)

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Adverse Selection and Auction Design for Internet Display Advertising

The American Economic Review ◽

10.1257/aer.20141198 ◽

2016 ◽

Vol 106 (10) ◽

pp. 2852-2866 ◽

Cited By ~ 13

Author(s):

Nick Arnosti ◽

Marissa Beck ◽

Paul Milgrom

Keyword(s):

Adverse Selection ◽

Auction Design ◽

Display Advertising ◽

Shill Bidding ◽

Heavy Tailed Distributions ◽

Price Auction ◽

Second Price Auction ◽

Heavy Tailed ◽

The Cost ◽

Second Price Auctions

We model an online display advertising environment in which “performance” advertisers can measure the value of individual impressions, whereas “brand” advertisers cannot. If advertiser values for ad opportunities are positively correlated, second-price auctions for impressions can be inefficient and expose brand advertisers to adverse selection. Bayesian-optimal auctions have other drawbacks: they are complex, introduce incentives for false-name bidding, and do not resolve adverse selection. We introduce “modified second bid” auctions as the unique auctions that overcome these disadvantages. When advertiser match values are drawn independently from heavy-tailed distributions, a modified second bid auction captures at least 94.8 percent of the first-best expected value. In that setting and similar ones, the benefits of switching from an ordinary second-price auction to the modified second bid auction may be large, and the cost of defending against shill bidding and adverse selection may be low. (JEL D44, D82, L86, M37)

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Health Reform, Health Insurance, and Selection: Estimating Selection into Health Insurance Using the Massachusetts Health Reform

The American Economic Review ◽

10.1257/aer.102.3.498 ◽

2012 ◽

Vol 102 (3) ◽

pp. 498-501 ◽

Cited By ~ 20

Author(s):

Martin B Hackmann ◽

Jonathan T Kolstad ◽

Amanda E Kowalski

Keyword(s):

Health Insurance ◽

Adverse Selection ◽

Health Reform ◽

Empirical Test ◽

Insurance Coverage ◽

Hospital Costs ◽

Average Hospital ◽

Reform Period ◽

State Variation ◽

The Cost

We implement an empirical test for selection into health insurance using changes in coverage induced by the introduction of mandated health insurance in Massachusetts. Our test examines changes in the cost of the newly insured relative to those who were insured prior to the reform. We find that counties with larger increases in insurance coverage over the reform period face the smallest increase in average hospital costs for the insured population, consistent with adverse selection into insurance before the reform. Additional results, incorporating cross-state variation and data on health measures, provide further evidence for adverse selection.

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