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Search With Adverse Selection
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DOI：10.3982/ECTA9969.png)
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Abstract
En 中文
This paper analyzes a sequential search model with adverse selection. We study information aggregation by the pricehow close the equilibrium prices are to the full-information priceswhen search frictions are small. We identify circumstances under which prices fail to aggregate information well even when search frictions are small. We trace this to a strong form of the winner's curse that is present in the sequential search model. The failure of information aggregation may result in inefficient allocations.
Keywords:
Adverse selection
winner's curse
search theory
auctions
information aggregation
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