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Adverse selection
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===Adverse selection in game theory=== The crisis of various financial markets makes people pay more and more attention to the [[market analysis]] of markets with adverse selection, especially the credit market and insurance market. Most of the current market analysis on competitive equilibrium market with adverse selection is based on the research results of Rothschild and Stiglitz (1976). We can also add adverse selection to a broad form of competitive market games. It allows companies to offer any limited contract, as well as a price differential subsidy. At the same time, the company pulled out of the market after initial contract offers were observed. In such cases, Netzer, Nick and Florian (2014) proved that perfect equilibrium in subgames always exists. When the withdrawal is costless, the set of equilibrium outcomes may correspond to the entire set of feasible contracts. We then focus on robust equilibria that continue to exist for small withdrawal costs. Netzer, Nick and Florian (2014) suggested that the Miyazaki—Wilson contracts are the unique, robust equilibrium outcome in this case.
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