Adverse Selection in the Credit Card Market
Written on 21.23 by Admin
Adverse selection is one of the most celebrated phenomena in the economics of information. Yet despite a burgeoning economics and finance literature consisting of literally hundreds of articles exploring the implications of adverse selection in credit markets, there remains little in the way of empirical studies which convincingly document the existence of adverse selection in credit markets as a real-world phenomenon. This paper examines the results of large-scale randomized trials in preapproved credit card solicitations for direct evidence of adverse selection.
