Symmetric Ignorance: The Cost of Anonymous Lemons

Abstract

Rules that restrict information required in negotiated private transactions have spurred a vast increase in the scope of anonymous financial markets, particularly in the US. The subtle costs of the information restricting rules raise questions about the social value of “completing” anonymous markets that would not naturally survive and did not historically exist.

Keywords: information asymmetry, securities markets, securitization, regulation, liquidity

JEL Classification: G10, G18, G28, G38, K22, N2