Achim Wambach

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November1999 Abstract: Rothschild and Stiglitz (1976) demonstrated that adverse selection may entail nonexis-tence of equilibrium in competitive insurance markets. We approach this problem in a dynamic model with boundedly rational insurance rms. Firms' behavior is based on imitation of proot making contracts, withdrawal of loss making contracts, and(More)
Most insurance companies publish few data on the occurrence and detection of insurance fraud. This stands in contrast to the previous literature on costly state verification, which has shown that it is optimal to commit to an auditing strategy, as the credible announcement of thoroughly auditing claim reports might act as a powerful deterrent. We show that(More)
The MIT Faculty has made this article openly available. Please share how this access benefits you. Your story matters. Abstract Internet search engines display advertisements along with search results, providing them with a major source of revenue. The display of ads is triggered by the use of keywords, which are found in the searches performed by search(More)
We consider the design of an optimal auction in which the seller can determine the allocation and the disclosure rule of the mechanism. Thus, in contrast to the standard analysis of a optimal auctions, the seller can explicitly design the disclosure of the information received by each bidder as his private information. We show that the optimal disclosure(More)
The tension between two margins of information acquisition is studied in a canonical two-period model of portfolio choice. At the intensive margin, an investor chooses the amount of information. At the extensive margin, investors subscribe to the information source. Only if the number of informed investors at the extensive margin is sufficiently small does(More)
This paper makes two contributions in the context of seller-buyer relationships with bilateral relationship-specific investment. Firstly, we demonstrate how ex-post negotiations via double auctions can be used to alleviate and often resolve the holdup problem. Secondly, we show that ex-post participation constraints make the holdup problem unavoidable in(More)
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