@techreport{NBERw2507,
 title = "Randomization with Asymmetric Information",
 author = "Richard J. Arnott and Joseph E. Stiglitz",
 institution = "National Bureau of Economic Research",
 type = "Working Paper",
 series = "Working Paper Series",
 number = "2507",
 year = "1988",
 month = "February",
 URL = "http://www.nber.org/papers/w2507",
 abstract = {It is by now well-known that, in the presence of moral hazard or adverse selection, randomization of insurance premia and benefits may be Pareto efficient. This paper: i) provides a typology of the various forms that randomization may take; ii) derives necessary and/or sufficient conditions for the desirability of these various forms of randomization; iii) obtains some simple characterization theorems of the efficient random policies; iv) gives some intuition behind the results; and v) considers why randomization appears to occur less often in practice than the theory suggests it should.},
}