Questions tagged [adverse-selection]

The tag has no usage guidance.

2 questions with no upvoted or accepted answers
Filter by
Sorted by
Tagged with
1
vote
0answers
25 views

Why is the expected value conditional on the trade taking place in an adverse selection problem?

I have been asked the following question, and I don't understand why the expected value of the firm is conditioned on the trade taking place. "Suppose that a firm owns a business unit that it wants ...
0
votes
0answers
905 views

Binding and slack constraints in adverse selection problem

When I am dealing with a constrained maximization, once I face constraints with inequality sign, I have to understand which one are binding and which others are slack. If I find that a constraint is ...