Transparency and distressed sales under asymmetric information

Artikel

We analyze price transparency in a dynamic market with private information and interdependent values. Uninformed buyers compete inter- and intra-temporarily for a good sold by an informed seller suffering a liquidity shock. We contrast public versus private price offers. With two opportunities to trade, all equilibria with private offers have more trade than any equilibrium with public offers; under some additional conditions, we show Pareto-dominance of the private-offers equilibria. If a failure to trade by the deadline results in an efficiency loss, public offers can induce a market breakdown before the deadline, while trade never stops with private offers.

Object Details

• Language: Englisch

References and Relationships

• Bibliographic citation: Journal: Theoretical Economics ; ISSN: 1555-7561 ; Volume: 11 ; Year: 2016 ; Issue: 3 ; Pages: 1103-1144 ; New Haven, CT: The Econometric Society

Classification and Topics

• Classification: Wirtschaft ; Asymmetric and Private Information; Mechanism Design ; Information and Market Efficiency; Event Studies; Insider Trading ; General Financial Markets: Government Policy and Regulation
• Subject: Adverse selection ; transparency ; distress ; market design ; volume

Contributors, Places and Time

• Event: Geistige Schöpfung
• (who): Fuchs, William ; Öry, Aniko ; Skrzypacz, Andrzej
• Event: Veröffentlichung
• (who): The Econometric Society
• (where): New Haven, CT
• (when): 2016

Further information

• DOI: doi:10.3982/TE2237
• Handle: http://hdl.handle.net/10419/150302
• Last update: 10.03.2025, 11:42 AM CET