Information acquisition in competitive markets: An application to the US mortgage market
Publication
, Journal Article
Burke, JM; Taylor, CR; Wagman, L
Published in: American Economic Journal: Microeconomics
December 1, 2012
How do price commitments impact the amount of information firms acquire about potential customers? We examine this question in the context of a competitive market where firms search for information that may disqualify applicants. Contracts are incomplete because the amount of information acquired cannot be observed. Despite competition, we find that firms search for too much information in equilibrium. If price discrimination is prohibited, members of high-risk groups suffer disproportionately high rejection rates. If rejected applicants remain in the market, the resulting adverse selection can be severe. We apply the results to the US mortgage market.
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Published In
American Economic Journal: Microeconomics
DOI
EISSN
1945-7685
ISSN
1945-7669
Publication Date
December 1, 2012
Volume
4
Issue
4
Start / End Page
65 / 106
Related Subject Headings
- 3803 Economic theory
- 3801 Applied economics
- 3502 Banking, finance and investment
- 14 Economics
Citation
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Burke, J. M., Taylor, C. R., & Wagman, L. (2012). Information acquisition in competitive markets: An application to the US mortgage market. American Economic Journal: Microeconomics, 4(4), 65–106. https://doi.org/10.1257/mic.4.4.65
Burke, J. M., C. R. Taylor, and L. Wagman. “Information acquisition in competitive markets: An application to the US mortgage market.” American Economic Journal: Microeconomics 4, no. 4 (December 1, 2012): 65–106. https://doi.org/10.1257/mic.4.4.65.
Burke JM, Taylor CR, Wagman L. Information acquisition in competitive markets: An application to the US mortgage market. American Economic Journal: Microeconomics. 2012 Dec 1;4(4):65–106.
Burke, J. M., et al. “Information acquisition in competitive markets: An application to the US mortgage market.” American Economic Journal: Microeconomics, vol. 4, no. 4, Dec. 2012, pp. 65–106. Scopus, doi:10.1257/mic.4.4.65.
Burke JM, Taylor CR, Wagman L. Information acquisition in competitive markets: An application to the US mortgage market. American Economic Journal: Microeconomics. 2012 Dec 1;4(4):65–106.
Published In
American Economic Journal: Microeconomics
DOI
EISSN
1945-7685
ISSN
1945-7669
Publication Date
December 1, 2012
Volume
4
Issue
4
Start / End Page
65 / 106
Related Subject Headings
- 3803 Economic theory
- 3801 Applied economics
- 3502 Banking, finance and investment
- 14 Economics