Equilibrium uniqueness in the suboptimal risk sharing model

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Equilibrium uniqueness in the suboptimal risk-sharing model:

In the suboptimal risk-sharing model of Application 8, prove the claim made in the text that the low-information-intensity optimum depicted by {S, B} in Figure is interim efficient if and only if the belief that the borrower is a good borrower lies below some threshold α∗, 0 ∗ ∗ is in the interior of the interval [0, 1].)

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Reference no: EM131248249

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