TY  - JOUR
AU  - Arnott,Richard
AU  - Greenwald,Bruce
AU  - Stiglitz,Joseph E.
TI  - Information and Economic Efficiency
JF  - National Bureau of Economic Research Working Paper Series
VL  - No. 4533
PY  - 1995
Y2  - August 1995
UR  - http://www.nber.org/papers/w4533
L1  - http://www.nber.org/papers/w4533.pdf
N1  - Author contact info:
Richard J. Arnott
Department of Economics
Boston College
Chestnut Hill, MA 02467
Tel: 617/552-3674
Fax: 617/552-2308
E-Mail: richard.arnott@ucr.edu

Joseph E. Stiglitz
Uris Hall, Columbia University
3022 Broadway, Room 814
New York, NY  10027
Tel: 212/854-0671
Fax: 212/662-8474
E-Mail: jes322@columbia.edu
AB  - Is an economy with adverse selection, moral hazard, or an incomplete set of risk markets "constrained" Pareto efficient? There are two sets of papers addressing this question, one asserting that, under seemingly quite general conditions, the economy is constrained Pareto efficient, the other (to which we have contributed) that it is not. In this paper, we delineate the differences in assumptions between the two sets of papers, and under our assumptions present an intuitive proof of the Pareto inefficiency of market equilibrium with moral hazard and identify what it is that the government can do that the market cannot.
ER  -