32 research outputs found
Equilibrium, Adverse Selection, and Statistical Distributions
This paper addresses the problem of multiple equilibria in markets with adverse selection. Akerlof (1970) identified an unique equilibrium of the total market failure under adverse selection. Posterioly, Wilson (1979, 1980) argued that the presence of adverse selection may lead to multiple equilibria. In particular, this paper extends the work of Rose (1993), who stated that the existence of multiple equilibria depends on the distribution of quality. Rose found that multiple equilibria are highly unlikely for most standard probability distributions. This work considers additional statistical distributions for quality. The simulation results suggest the existence of multiple equilibria when the quality follows a beta normal distribution.Adverse Selection; Multiple Equilibria; Statistical Distributions; Akerlof-Wilson Model.
On a new approach to estimate the shape parameter of the inverse Gaussian distribution
In this paper, we propose a new simple method for estimating the shape parameter of the inverse Gaussian distribution. This new method makes use of the reciprocal property of the distribution. Also, bias-reduced versions of this proposed estimator are introduced. Furthermore, a new test for the coefficient of variation in an inverse Gaussian distribution is derived. The performance of the estimators are evaluated via Monte Carlo simulations. In general, compared with the maximum likelihood estimator, the proposed method has smaller bias. Two real data sets are used to illustrate the proposed methodology