Imperfect Information in Markets for Contract Terms: The Examples of Warranties and Security Interests

The existence of imperfect information is thought to provide firms with incentives to degrade contract quality by supplying terms that well-informed consumers would refuse. We show, in contrast, that these incentives are weaker than is commonly supposed; rather, when consumers gather relatively little information, the profit maximizing strategy for firms is likely to involve offering the contract terms that consumers prefer, but at supracompetitive prices. In consequence, a standard state response to imperfect information problems, regulating the substantive terms of transactions, is often misplaced. When imperfect information exists, the state instead should reduce the costs to consumers of comparison shopping for contract terms, because such shopping reduces prices and also reduces further the incentive of firms to degrade contract quality

Imperfect Information and Monopolistic Competition

This paper reviews recent search equilibrium models to see whether usable policy instruments can be derived from them. It concludes that the strength of the assumptions that many of these models make largely precludes such derivations, and ends by sketching possible lines of research that have both positive interest and the potential to yield helpful normative conclusions

The ubiquitin system: pathogenesis of human diseases and drug targeting

AbstractWith the many processes and substrates targeted by the ubiquitin pathway, it is not surprising to find that aberrations in the system underlie, directly or indirectly, the pathogenesis of many diseases. While inactivation of a major enzyme such as E1 is obviously lethal, mutations in enzymes or in recognition motifs in substrates that do not affect vital pathways or that affect the involved process only partially may result in a broad array of phenotypes. Likewise, acquired changes in the activity of the system can also evolve into certain pathologies. The pathological states associated with the ubiquitin system can be classified into two groups: (a) those that result from loss of function-mutation in a ubiquitin system enzyme or in the recognition motif in the target substrate that lead to stabilization of certain proteins, and (b) those that result from gain of function-abnormal or accelerated degradation of the protein target. Studies that employ targeted inactivation of genes coding for specific ubiquitin system enzymes and substrates in animals can provide a more systematic view into the broad spectrum of pathologies that may result from aberrations in ubiquitin-mediated proteolysis. Better understanding of the processes and identification of the components involved in the degradation of key regulatory proteins will lead to the development of mechanism-based drugs that will target specifically only the involved proteins

Intervening in Markets on the Basis of Imperfect Information: A Legal and Economic Analysis

A common justification for recent judicial and legislative interventions in consumer markets to set contract terms or to require firms to disclose price or other product-related information is that consumers are imperfectly informed with respect to the transactions they make. It is generally recognized, however, that information is never perfect; the decisionmaker\u27s task, therefore, is to characterize, in terms of the need for intervention, real world states that are intermediate between perfect information and perfect ignorance. These decisions are now made in what can be described politely as an impressionistic fashion, because lawyers have no rigorous tools for evaluating and responding to information problems. In recent years, economists have developed a variety of models that begin to explain the behavior of markets characterized by imperfect information. These models, however, have been of little practical use to most lawyers, judges, and legislators, because of their mathematical complexity. The goal of this Article is to communicate to lawyers and decisionmakers the legal implications of this new economics of information

Subsets of R which support hypergroups with polynomial characters

AbstractIt is shown that if a hypergroup (H,∗), with H an infinite subset of R, has polynomial characters of every degree and if either H is compact or the polynomials are orthogonal with respect to a measure supported on H, then those polynomials are essentially the Jacobi polynomials. Related results are obtained for polynomial product formulas

Consumer Markets for Warranties

This paper considers markets for warranties when consumers are imperfectly informed about both product and warranty prices and about which firms sell with warranties and which firms sell without warranties. We characterize necessary and sufficient conditions for existence of the various equilibrium configurations of price and warranty coverage that can arise in two paradigm cases; when all consumers prefer warranties and when none do. Our results suggest that firms will exploit imperfect information by charging noncompetitive prices as well as by offering less than ideal warranty coverage, and that the former practice may be more serious in many markets than the latter