Adverse Selection in the Market for Slaves in Mauritius, 1825-1835
Canada Research Chair in Risk Management Working Paper No. 06-02
48 Pages Posted: 26 Feb 2006
Date Written: February 2006
Evidence on adverse selection in slave markets remains inconclusive. We study this question through notarial acts on public slave auctions in Mauritius between 1825 and 1835, involving 4,286 slaves. In addition to slave characteristics, the acts document the identities of buyers and sellers. We use this information to determine whether the buyer of a slave was related (e.g. a relative or a spouse) to the original slave owner, and thus most likely better-informed than other bidders. Auction-theoretic models predict that bidding should be more aggressive when informed bidders are present in open-bids, ascending auctions, such as slave auctions. By proxying informed bidders by related bidders, our results consistently indicate that this is the case, pointing toward presence of residual adverse selection in the market for slaves in Mauritius.
Keywords: Adverse Selection, Information Asymmetry Test, English Auctions, Slavery, Mauritius
JEL Classification: D82, N37
Suggested Citation: Suggested Citation