Prophecy: Prediction, Power, and the Fight for the Future, from Ancient Oracles to AI
by Carissa Véliz · 21 Apr 2026 · 503pp · 129,255 words
with less healthy and less satisfied staff. From the point of view of economics, part of the lesson of this story is that adverse selection can kill markets.[24] Adverse selection happens when the costlier buyers, such as sicker customers, are more likely to buy insurance, and the cheaper buyers such as healthier customers
…
on the Rails.” Ars Technica, Aug. 6, 2024. Cutler, David M., and Sarah J. Reber. “Paying for Health Insurance: The Trade-Off Between Competition and Adverse Selection.” Quarterly Journal of Economics 113 (1998): 433–66. Dahms, Thomas. “Diligent Bureaucrats and the Expulsion of Jews from West Prussia, 1772–1786.” German History 39
…
, xxi, 56, 179, 180, 183, 218, 269 accounting, 57–58 Achilles, 296 Aciman, André, 228 Actium, Battle of, 178 Adichie, Chimamanda, 268 Adorno, Theodor, 62 adverse selection, 250 advertising, 78–79 advice, 97–98, 101 Aeschylus, 294 affordances, 143 Agamemnon, 296–97 Agamemnon (Aeschylus), 294 agency and autonomy, 201–2, 218, 233
Trading and Exchanges: Market Microstructure for Practitioners
by Larry Harris · 2 Jan 2003 · 1,164pp · 309,327 words
the wrong side of the market. If prices change before they can restore their original positions, they will lose money. Economists call this risk adverse selection risk. Adverse selection risk is the most important cause of ex post regret. Limit order traders can minimize the risk of ex post regret by placing their orders
…
price changes are independent of their inventory imbalances, the risk is a diversifiable inventory risk. If they are inversely correlated, the risk is an adverse selection risk. 13.7.1 Diversifiable Inventory Risk Diversifiable inventory risks are due to events that cause price changes no one can predict. Such price changes
…
are sometimes positive and sometimes negative. On average, they are zero. Otherwise, they would be predictable. Diversifiable inventory risks are benign compared to adverse selection risk. Although dealers lose when prices unexpectedly move against their positions, they gain when prices unexpectedly move in their favor. Since the price changes are
…
one security. Firms often deal in hundreds or thousands of instruments in order to diversify their exposure to diversifiable inventory risks. 13.7.2 Adverse Selection Risk Dealers face adverse selection risk when they trade with informed traders. This risk is not benign. Dealers—like all traders—lose money when they trade with better
…
dealer inventories fall short of their targets, and prices subsequently rise. When informed traders sell, dealer inventories exceed their targets, and prices rise. Dealers avoid adverse selection risk only by avoiding informed traders. The best way they can avoid informed traders is to set their quotes near fundamental values so that informed
…
values and avoid substantial losses. Dealers generally discover fundamental values as a by-product of their search for market values. 13.8 DEALER RESPONSES TO ADVERSE SELECTION Successful dealers must confront the informed trader problem continuously. They must respond appropriately when they suspect that they have traded with an informed trader.
…
publicly available fundamental information is scarce or highly ambiguous. Such instruments are hard to value and often are highly volatile. 13.8.3 The Adverse Selection Spread Component Dealers do not simply adjust their quotes after they believe that they have traded with an informed trader. Before they set their quotation
…
thus is not attractive to well-informed traders who trade on material information that will soon become public. Time Slicing allows Madoff to control the adverse selection problem that all dealers face. By refusing to offer immediate liquidity to well-informed traders, Madoff can offer more liquidity to uninformed traders. Source:
…
trader is likely to be trading on material information, their ask prices will be substantially greater than their bid prices. The dealers’ response to adverse selection makes trading large orders very expensive. Dealers generally believe that traders with large orders tend to be well informed. They believe this because well-informed
…
substantially when they believe that traders have split large orders into small pieces to obtain better prices. The price adjustments that dealers make to avoid adverse selection cause large orders to have substantial market impact. The substantial impacts that large anonymous orders have on price make it very difficult to trade
…
that dealers receive are not balanced, dealer inventory imbalances become inversely correlated with future price changes, and dealers thereby lose money. Dealers avoid these adverse selection losses by setting their bid and offer prices so that they surround their best estimates of fundamental values. They estimate values by using all information
…
market values. • The inferences dealers make about future order flows create a spread between their bid and ask prices. This spread is called the adverse selection spread component. • The adverse selection spread component increases with trade size. 13.15 QUESTIONS FOR THOUGHT • Which traders do you expect are more risk averse, dealers or brokers
…
an information perspective. Here we examine it from an accounting perspective. Remarkably, although the two perspectives are quite different, they both imply the same size adverse selection spread component. The two components taken together constitute the total spread. Dealers never quote both components separately. They simply quote their bid and ask prices
…
component are permanent in the sense that they do not systematically reverse. Subsequent price increases and decreases are equally likely. Price changes due to the adverse selection spread component reflect changes in dealers’ estimates of instrument values. When dealers efficiently use all information available to them to estimate values, the resulting sequence
…
permanent in the sense that it affects the levels of all subsequent values of the random walk. 14.2.3 Two Explanations for the Adverse Selection Component The adverse selection spread component has two aspects. From an information perspective (see chapter 13), it is the difference in the value estimates that dealers make
…
result, known as the Glosten-Milgrom theorem, appears in the appendix to this chapter. You can easily understand the result by considering what determines the adverse selection component from both perspectives. To simplify our discussion, assume that dealers know exactly what values are if informed traders are trading. (Our result does
…
of the pricing error (assuming that the trader is informed) times the probability of trading with an informed trader. From the accounting perspective, the adverse selection spread component is the amount that dealers should charge all their clients to recover their losses to informed traders. In our simple analysis, assume the
…
two components give prices different statistical properties. The transaction cost spread component causes prices to bounce back and forth between bid and offer prices. The adverse selection spread component causes unpredictable price changes that have the properties of a random walk. In both cases, the price changes depend on whether a
…
why uninformed traders lose to informed traders, regardless of whether they trade with limit or market orders. In both cases, they suffer the effects of adverse selection. When uninformed traders use limit orders, their orders fill quickly if they overprice their bids or underprice their offers. Informed traders then eagerly trade
…
future price changes correctly, prices often will move away from the limit orders, and the uninformed traders will regret not trading. In this case, adverse selection causes uninformed traders to lose profitable trading opportunities. Uninformed traders thus often regret using limit orders. When they trade with informed traders, they regret trading
…
expensive than market order strategies for uninformed traders. Equilibrium spreads therefore must widen to compensate. The additional widening of the bid/ask spread is the adverse selection spread we discussed earlier. For most securities and contracts, the degree of information asymmetry varies inversely with how well traders estimate values. When most traders
…
will be wide. Wide spreads, however, discourage uninformed investors, decrease trading volumes (a secondary spread determinant), and thereby make spreads even wider. Asymmetric Information The adverse selection spread model suggests that markets with asymmetrically informed traders will have wide spreads. Spreads will be widest when well-informed traders know material information about
…
volatile instruments than for stable instruments. Volatility therefore has a strong secondary effect on spreads because it is a good proxy for asymmetric information. The adverse selection spread component generally will be large for volatile instruments. Utilitarian Trading Interest Utilitarian traders—primarily investors, borrowers, hedgers, asset exchangers, and gamblers—trade because
…
tend to have narrow bid/ask spreads. Second, since utilitarian traders are uninformed, they dilute information in the order flow when they trade. The adverse selection spread component therefore will be small when utilitarian trading interest is strong. Since we discussed above how asymmetric information affects bid/ask spreads, we now
…
quickly lay off inventory imbalances. Since they can more easily control their inventories in active markets, they face less inventory risk—diversifiable inventory risk and adverse selection risk. They therefore can quote smaller spreads for actively traded instruments than they can for infrequently traded instruments. Public traders who are committed to trading
…
will be wider for new firms than for old firms. Insider-trading Rules Markets that effectively enforce insider-trading rules protect their liquidity suppliers from adverse selection. Insider-trading rules prevent traders from trading on certain types of material information. Bid/ask spreads will be smaller when such insiders cannot trade.
…
• Dealer spreads depend on their costs. • Informed trading makes spreads wide. • Uninformed traders indirectly lose to informed traders when they pay spreads made wide by adverse selection. • Spreads are small in active markets for well-known assets. • Large anonymous traders are widely thought to be well informed. • Limit order traders give away
…
his best estimate of the security value is V − P · E. The difference between these two values, 2 · P · E, is the adverse selection spread component. The derivation of the adverse selection spread from the accounting perspective estimates the spread the dealer must quote to ensure that he expects to just break even, ignoring
…
do, they demand very large price concessions. Block liquidity suppliers demand these price concessions for the same reasons that dealer bid/ask spreads include an adverse selection component. These price concessions allow liquidity suppliers to recover from uninformed traders what they lose to informed traders. They also reflect the inferences about fundamental
…
better-informed traders have. When they suffer the winner’s curse, they have mistakenly valued their instruments. 16.2.1.1 The Adverse Selection Risk Value traders are subject to adverse selection risk because they offer liquidity in response to other traders who demand it. They must be particularly careful that they do not
…
in fact are overvalued or undervalued. They eventually lose when prices move against their positions as traders learn the new information. Value traders respond to adverse selection risk just as dealers do. They widen their spreads to recover from uninformed traders what they lose to better-informed traders. Equivalently, they widen
…
they ultimately offer liquidity are uninformed. Since these research activities are expensive, outside spreads must be larger than dealer spreads. In contrast, dealers control their adverse selection exposure by adjusting prices to find market values, by avoiding well-informed traders, and by refusing to take large inventory positions. Since value traders speculate
…
information may arrive that changes values. Such changes make their positions risky. If the new information is inversely correlated with their positions, they have suffered adverse selection from news traders. If the new information is uncorrelated with their positions, it will be diversifiable. In either event, value traders must trade at
…
to do so. Unless compelled to provide liquidity, dealers provide liquidity only to the extent that they feel comfortable. If they face too much adverse selection from informed traders, no amount of capital will make them willing to supply liquidity. Capital adequacy regulations therefore only ensure that dealers can offer liquidity
…
to price reversals. 20.6 QUESTIONS FOR THOUGHT • What are the relations among liquidity, transaction costs, and transitory volatility? • To which volatility components do the adverse selection and transaction cost spread components contribute? • To which volatility component do the price impacts of news traders contribute? To which volatility component do the price
…
permanent price effect is due to inferences that dealers (and other liquidity suppliers) make about informed traders from the order flow. It corresponds to the adverse selection spread component introduced in chapter 13. Information theoretic considerations suggest that the permanent effect should be proportional to trade size. (See chapters 12 and
…
will not execute. However, if prices move toward them, they will quickly execute, and the traders who submitted these limit orders will regret trading. Adverse selection hurts these traders by reducing their opportunities to profit from trades that are followed by price changes which benefit their positions. Dealers and public limit
…
spreads and thereby increases transaction costs for uninformed market order traders. (Chapters 13 and 14 explain how dealers and limit order traders respond to the adverse selection due to informed traders.) Insider trading also increases transaction costs for uninformed limit order traders. Like dealers, limit order traders lose when they trade
…
F. M. Osborne. 1966. Market making and reversal on the stock exchange. Journal of the American Statistical Association 61(316), 897–916. Sandås, Patrik. 2001. Adverse selection and competitive market making: Empirical evidence from a limit order market. Review of Financial Studies 14(3), 705–734. Silber, William L. 1984. Marketmaker behavior
…
firm, 360 active manager, 197, 442, 443, 458, 487–88 actual shipper, 352, 353 ADRs. See American depository receipts adverse selection, 287–91, 303 adverse selection loss, 286 adverse selection risk, 77, 135, 286, 340–41 adverse selection spread component, 289–90, 299, 300–302, 320–21 affirmative determination, 155 after-hours trading session, 92 afternoon session, 92
…
offer, 70, 217 Betreuers, 495 betting, 91 bid, 69, 125 bid/ask bounce, 299, 413, 432 bid/ask spread, 71, 93, 297–321 adverse selection and uninformed traders, 303 adverse selection component, 289–90, 299–302 cross-sectional predictions, 311–17 dealer, 297–98, 313, 519 definition of, 70, 280 equilibrium spreads in continuous
…
451 prediction problem, 450–52 statistical evaluation, 452–71 unforseeable factors, 443–44 perishable goods, 412, 416 permanent price effect, 435 permanent spread component. See adverse selection spread component Perold’s implementation shortfall, 424 Persian Gulf, 352 peso problem, 468 Pfizer (co.), 228 Philadelphia Stock Exchange, 589 physically convened markets, 90 physically
…
uniform pricing rule, 120–25, 129–30 unilateral search, 395–96 uninformed liquidity demanders, 339–40, 373, 376 uninformed traders, 6, 237–38, 241 and adverse selection, 303, 304 and asymmetric information, 531 and block trading, 327, 331 and dealers, 291, 292 definition of, 177 and fundamental values, 239 reasons for
High-Frequency Trading: A Practical Guide to Algorithmic Strategies and Trading Systems
by Irene Aldridge · 1 Dec 2009 · 354pp · 26,550 words
maker to other market participants. This chapter describes information-based microstructure trading strategies. MEASURES OF ASYMMETRIC INFORMATION Asymmetric information present in the markets leads to adverse selection, or the ability of informed traders to “pick off” uninformed market participants. According to Dennis and Weston (2001) and Odders-White and Ready (2006), the
…
of asymmetric information have been proposed over the years: r r r r r Quoted bid-ask spread Effective bid-ask spread Information-based impact Adverse-selection components of the bid-ask spread Probability of informed trading Quoted Bid-Ask Spread The quoted bid-ask spread is the crudest, yet most readily
…
time t − 1 to time t. Brennan and Subrahmanyam (1996) propose five lags in estimation of equation (1): K = M = 5. Adverse Selection Components of the Bid-Ask Spread The adverse selection components of the bid-ask spread is attributable to Glosten and Harris (1988). The model separates the bid-ask spread into the
…
following three components: r Adverse selection risk r Order-processing costs r Inventory risk Models in a similar spirit were proposed by Roll (1984); Stoll (1989); and George, Kaul, and Nimalendran
…
to time t, Si,t is the effective bid-ask spread as defined previously, and λi is the fraction of the traded spread due to adverse selection. Probability of Informed Trading Easley, Kiefer, O’Hara, and Paperman (1996) propose a model to distill the likelihood of informed trading from sequential quote data
…
. Ask t Mid t Bid t * Time Sell FIGURE 11.2 Inventory costs. Askt Mid t Bid t * Time Sell FIGURE 11.3 Asymmetric information (adverse selection). Trading on Market Microstructure 151 order. If bid-ask spreads were to compensate the dealer for the risks associated with holding excess inventory, then any
…
foreign exchange prices differs from the process of other asset classes, say equities. Traditional microstructure theory observes four components contributing to the bid-ask spread: adverse selection, inventory risk, operating costs, and occasional monopoly power. Foreign exchange literature often excludes the possibility of monopolistic pricing in the foreign exchange markets due to
…
decentralization of competitive foreign exchange dealers. Some literature suggests that most bid-ask spreads arise as a function of adverse selection; dealers charge the bid-ask spread to neutralize the effects of losing trades in which the counterparties are better informed than the dealer himself. As
…
Monetary Fund Working Paper. 92/61. Samuelson, Paul, 1965. “Proof that Properly Anticipated Prices Fluctuate Randomly.” Industrial Management Review 6, 41–49. Sandas, P., 2001. “Adverse Selection and Competitive Market Making: Empirical Evidence from a Limit Order Market.” Review of Financial Studies 14, 705–734. Savor, Pavel and Mungo Wilson, 2008. “Asset
Principles of Corporate Finance
by Richard A. Brealey, Stewart C. Myers and Franklin Allen · 15 Feb 2014
Alessandro Lizzeri argue that this may help to explain the prevalence of car leasing. See I. Hendel and A. Lizzeri, “The Role of Leasing under Adverse Selection,” Journal of Political Economy 110 (February 2002), pp. 113–143. Thomas Gilligan uses a similar argument to analyze the market for aircraft leasing. See T
…
environmental damage can eat up millions of dollars in legal fees. Insurance companies need to recognize these costs when they set their premiums. • Reason 2: Adverse selection. Suppose that an insurer offers life insurance policies with “no medical exam needed, no questions asked.” There are no prizes for guessing who will be
…
most tempted to buy this insurance. Our example is an extreme case of the problem of adverse selection. Unless the insurance company can distinguish between good and bad risks, the latter will always be most eager to take out insurance. Insurers increase premiums
…
be less careful to take proper precautions against damage. Insurance companies are aware of this and factor it into their pricing. The extreme forms of adverse selection and moral hazard (like the fire in the farmer’s barn) are rarely encountered in professional corporate finance. But these problems arise in more subtle
…
paying for engineering studies or for a program to monitor maintenance. All these costs are rolled into the insurance premium. When the costs of administration, adverse selection, and moral hazard are small, insurance may be close to a zero-NPV transaction. When they are large, insurance is a costly way to protect
…
pool risks by holding a diversified portfolio of policies. Insurance works less well when policies are taken up by companies that are most at risk (adverse selection) or when the insured company is tempted to skip on maintenance or safety procedures (moral hazard). Firms can also hedge with options and with forward
…
(APV) Net present value of an asset if financed solely by equity plus the present value of any financing side effects. ADR American depository receipt. Adverse selection A situation in which a pricing policy causes only the less desirable customers to do business, e.g., a rise in insurance prices that leads
…
–651 review of, 500–501 value of interest tax shields, 500–501 Adler, B. E., 857 Administrative costs in leasing, 641 in pooling risks, 663 Adverse selection risk, 663 Agency costs, 12 Agency for International Development, 794n Agency problem, 295–314, 862–863, 882–883 agents versus principals, 12 compensation plans, 295
Money Free and Unfree
by George A. Selgin · 14 Jun 2017 · 454pp · 134,482 words
event of any single counterparty’s failure. A simple way to accomplish that end, while further limiting the Fed’s risk exposure and guarding against adverse selection, would be to open participation to any financial institution with a CAMEL score of 1 or 2.7 Such a broadening of Fed counterparties would
…
have to decide what security types are eligible, favoring those for which holdings are sufficiently dispersed to provide for competitive bidding, and (to further discourage adverse selection) indicating maximum values of total and individual security purchases that it is prepared to make from a single participant.18 The list of such securities
…
assure this outcome and, thereby, make a single set of open market rules suffice to consistently conform to Bagehot’s rule—while still guarding against adverse selection—the Fed need only take care to set sufficiently low reference prices.19 These prescriptions, taken together, might be summarized by paraphrasing Bagehot as follows
Markets, State, and People: Economics for Public Policy
by Diane Coyle · 14 Jan 2020 · 384pp · 108,414 words
asymmetries A5 Private and social benefits are equal; private and social costs are equal Externalities A6 There are complete markets (including for all future goods) Adverse selection; tragedy of the commons A7 Goods are owned and able to be exchanged—there are property rights, and people obey the law Transaction costs A8
…
to sell good cars will withdraw from the market, leaving only lemons available, which buyers do not want to purchase. This process is known as adverse selection—in the extreme, the market can collapse as ultimately only lemons are offered for sale. Even though everyone would be better off if trades take
…
place, there can end up being no sales occurring because of adverse selection. Of course as a tale about second-hand cars, the market for lemons model is unrealistic because in real life these get bought and sold
…
where there are information asymmetries, there will be a mixture of market solutions (including the potential for legal claims) and regulation. Many markets can experience adverse selection. The phenomenon often features in insurance markets: if the risk of a claim, and therefore the premium, is too high, only people who are bad
…
the risk of making a claim is quite low; and anyway such policies are costly. These kinds of market failures due to asymmetric information and adverse selection are pervasive in insurance, including health insurance. People know more than the insurance company about their own health, and it is hard for others to
…
of this chapter. This service is health care. There is every reason to believe private insurance markets alone cannot be efficient because of the inherent adverse selection and moral hazard when it comes to people’s health. Different countries make significantly different policy choices, although everywhere both political division and rising health
…
person to person, but the uncertainty is about timing (and the small possibility of early death); so this is not an insurance market fraught with adverse selection problems, but rather a savings market. Some of these treatments could be moved outside the NHS boundary, as long as people know they need to
…
, and most efficiently at scale by the government, either because the risks are aggregate (such as the risk of a recession, causing unemployment) or because adverse selection leads to under-provision of insurance by the market. For all the complexity and dilemmas of different countries’ social security nets, the post-tax and
…
information needed to calculate them either. Information asymmetries mean private insurance is problematic. But government insurance does not remove the problems of moral hazard and adverse selection. Perhaps it just means people cheating on benefits rather than lying to insurance companies. Chapter 4 discussed other institutions, neither markets nor state, as examples
…
divergence between the two tends to be higher when there are no close substitutes for the good or amenity in question. GLOSSARY OF TECHNICAL TERMS Adverse selection: A situation that occurs because of asymmetric information, which leads to distortions in market allocations. Either the buyer or seller holds more information about the
…
over time than in a competitive environment. INDEX Page numbers in italics refer to figures and tables. A/B testing, 189, 331 Ackerman, Bruce, 269 adverse selection, 74–75, 245–46, 251, 291 advertising, 29, 94, 124, 152, 174, 181–82, 197 aerospace industry, 108, 130, 157 Affordable Care Act (2010), 210
…
, 104, 105, 122; new vs. existing, 106 inheritance taxes, 231, 232 innovation rents, 51–53 Instagram, 91 instrumental variables (IV), 301 insurance, 7, 202, 203; adverse selection in, 74–75, 245–46, 251, 291; moral hazard and, 13–14, 210, 245–46, 250, 274, 291. See also health insurance; life insurance; unemployment
Expected Returns: An Investor's Guide to Harvesting Market Rewards
by Antti Ilmanen · 4 Apr 2011 · 1,088pp · 228,743 words
. Asymmetric information refers to situations in which one party is better informed than the other, leading to so-called principal–agent problems (including moral hazard, adverse selection, conflict of interest). Vayanos–Woolley (2010) show that delegated asset management can cause momentum patterns. As investors (principals) try to learn about a manager’s
…
“index”. Investable indices offered lower costs, better transparency, and better liquidity than non-index investments. However, top HFs had little incentive to participate, leading to adverse selection bias, and investable HF indices have consistently underperformed broader HF indices. After a brief detour I will return to other HF alternatives. Alphas, betas, alternative
Unelected Power: The Quest for Legitimacy in Central Banking and the Regulatory State
by Paul Tucker · 21 Apr 2018 · 920pp · 233,102 words
regular agents, but standard P-A analysis applies in slightly special ways. As economists have documented, any principal-agent problem has three components: incomplete contracts, adverse selection, and moral hazard. Most elementally, a principal cannot write a fully state-contingent contract that determines what should be done in every possible circumstance. They
…
mandate. The two hazards are linked, potentially deterring well-qualified candidates from applying at all, in an appointments-process manifestation of what is known as adverse selection.25 Even where personnel choices are made in good faith and wisely ex ante, they may prove badly flawed ex post because, once again as
…
recognized body of expertise or because experts are so few that there is not a professional community. Furthermore, formally requiring recognized expertise can reduce the adverse selection problems facing politicians and also constrain the politicians from appointing inexpert allies, since an expert will tend to have a professional reputation already. Third, the
…
. Complementarities and Potential Conflicts First, the five Design Precepts (and the MMCs) have to be seen as a package: one designed to mitigate both the adverse-selection and moral-hazard problems inherent in any regime of delegation, and to address the inevitable incompleteness of the trust deed. We have seen that there
…
contagion.6 An Unresolved Debate Needless to say, this regime is anything but uncontentious. Like all insurance regimes, it incorporates problems of moral hazard and adverse selection. The issues have been debated, often heatedly, for more than a century. When, in the 1860s, perhaps drawing on his experience in the family bank
…
framework, and accountability mechanisms that do not undermine the purpose of the policy. Substantively, the regime must strike a consciously chosen balance among credibility, avoiding adverse selection problems, addressing moral hazard problems, and operating under a clear Fiscal Carve-Out within which the central bank can act on its own authority but
…
and, 38, 153, 179, 243n13, 253n21, 259, 273, 279n14, 297, 317–20, 342–47, 371–75, 387, 393, 405–6, 519, 539, 548, 552–53 adverse selection, 87–88, 105, 124, 506, 510 AIG, 6, 433 Alesina, Alberto, 92n2, 93n5, 99–104, 107–8, 212, 416n7, 419 Amato, Giuliano, 168 Andrew Crockett
Unconventional Success: A Fundamental Approach to Personal Investment
by David F. Swensen · 8 Aug 2005 · 490pp · 117,629 words
startup investing. Aside from the dismal picture provided by historical experience, all but the most long-standing investors in venture partnerships face a problem in adverse selection. The highest-quality, top-tier venture firms generally refuse to accept new investors and ration capacity even among existing providers of funds. Venture firms willing
Mastering Private Equity
by Zeisberger, Claudia,Prahl, Michael,White, Bowen, Michael Prahl and Bowen White · 15 Jun 2017
programs, namely, through a passive co-investment approach (syndication), introduces either increased risk or significant cost. The syndication process exposes investors to the effects of adverse selection from both the GP and LP sides, may lead to poorly understood investments and offers little differentiated value to GPs. The challenges can be grouped
…
an increasingly crowded co-investment space. Selection Issues When LPs choose in which deals to co-invest, they typically suffer from two distinct risks: (1) adverse selection by GPs and (2) selection problems by LPs. GP SELECTION: We start with the hypothesis that GPs might offer LPs marginally less attractive deals for
…
certainly been significant in some cases. LP SELECTION: Even if a GP offered all potential deals to an LP for co-investment, thereby eliminating any adverse selection problems on his side, the LP would still have to make the decision where to invest. By picking investments (and therefore moving away from “buying
Stigum's Money Market, 4E
by Marcia Stigum and Anthony Crescenzi · 9 Feb 2007 · 1,202pp · 424,886 words
Fixed: Why Personal Finance is Broken and How to Make it Work for Everyone
by John Y. Campbell and Tarun Ramadorai · 25 Jul 2025
Radical Uncertainty: Decision-Making for an Unknowable Future
by Mervyn King and John Kay · 5 Mar 2020 · 807pp · 154,435 words
Basic Economics
by Thomas Sowell · 1 Jan 2000 · 850pp · 254,117 words
Other People's Money: Masters of the Universe or Servants of the People?
by John Kay · 2 Sep 2015 · 478pp · 126,416 words
Advances in Financial Machine Learning
by Marcos Lopez de Prado · 2 Feb 2018 · 571pp · 105,054 words
Efficiently Inefficient: How Smart Money Invests and Market Prices Are Determined
by Lasse Heje Pedersen · 12 Apr 2015 · 504pp · 139,137 words
India's Long Road
by Vijay Joshi · 21 Feb 2017
The End of Accounting and the Path Forward for Investors and Managers (Wiley Finance)
by Feng Gu · 26 Jun 2016
Big Data and the Welfare State: How the Information Revolution Threatens Social Solidarity
by Torben Iversen and Philipp Rehm · 18 May 2022
The Wisdom of Finance: Discovering Humanity in the World of Risk and Return
by Mihir Desai · 22 May 2017 · 239pp · 69,496 words
Naked Economics: Undressing the Dismal Science (Fully Revised and Updated)
by Charles Wheelan · 18 Apr 2010 · 386pp · 122,595 words
A Demon of Our Own Design: Markets, Hedge Funds, and the Perils of Financial Innovation
by Richard Bookstaber · 5 Apr 2007 · 289pp · 113,211 words
Global Governance and Financial Crises
by Meghnad Desai and Yahia Said · 12 Nov 2003
High-Frequency Trading
by David Easley, Marcos López de Prado and Maureen O'Hara · 28 Sep 2013
After the Music Stopped: The Financial Crisis, the Response, and the Work Ahead
by Alan S. Blinder · 24 Jan 2013 · 566pp · 155,428 words
Corporate Finance: Theory and Practice
by Pierre Vernimmen, Pascal Quiry, Maurizio Dallocchio, Yann le Fur and Antonio Salvi · 16 Oct 2017 · 1,544pp · 391,691 words
Poor Economics: A Radical Rethinking of the Way to Fight Global Poverty
by Abhijit Banerjee and Esther Duflo · 25 Apr 2011 · 370pp · 112,602 words
Culture and Prosperity: The Truth About Markets - Why Some Nations Are Rich but Most Remain Poor
by John Kay · 24 May 2004 · 436pp · 76 words
Investment: A History
by Norton Reamer and Jesse Downing · 19 Feb 2016
Fault Lines: How Hidden Fractures Still Threaten the World Economy
by Raghuram Rajan · 24 May 2010 · 358pp · 106,729 words
The Third Pillar: How Markets and the State Leave the Community Behind
by Raghuram Rajan · 26 Feb 2019 · 596pp · 163,682 words
The Economics Anti-Textbook: A Critical Thinker's Guide to Microeconomics
by Rod Hill and Anthony Myatt · 15 Mar 2010
Capitalism, Alone: The Future of the System That Rules the World
by Branko Milanovic · 23 Sep 2019
The Price of Time: The Real Story of Interest
by Edward Chancellor · 15 Aug 2022 · 829pp · 187,394 words
Foolproof: Why Safety Can Be Dangerous and How Danger Makes Us Safe
by Greg Ip · 12 Oct 2015 · 309pp · 95,495 words
The Best Way to Rob a Bank Is to Own One: How Corporate Executives and Politicians Looted the S&L Industry
by William K. Black · 31 Mar 2005 · 432pp · 127,985 words
Wars, Guns, and Votes: Democracy in Dangerous Places
by Paul Collier · 9 Feb 2010 · 264pp · 74,313 words
Good Economics for Hard Times: Better Answers to Our Biggest Problems
by Abhijit V. Banerjee and Esther Duflo · 12 Nov 2019 · 470pp · 148,730 words
Broken Markets: How High Frequency Trading and Predatory Practices on Wall Street Are Destroying Investor Confidence and Your Portfolio
by Sal Arnuk and Joseph Saluzzi · 21 May 2012 · 318pp · 87,570 words
Modernising Money: Why Our Monetary System Is Broken and How It Can Be Fixed
by Andrew Jackson (economist) and Ben Dyson (economist) · 15 Nov 2012 · 363pp · 107,817 words
More: The 10,000-Year Rise of the World Economy
by Philip Coggan · 6 Feb 2020 · 524pp · 155,947 words
Finding Alphas: A Quantitative Approach to Building Trading Strategies
by Igor Tulchinsky · 30 Sep 2019 · 321pp
The Fissured Workplace
by David Weil · 17 Feb 2014 · 518pp · 147,036 words
Smart Money: How High-Stakes Financial Innovation Is Reshaping Our WorldÑFor the Better
by Andrew Palmer · 13 Apr 2015 · 280pp · 79,029 words
Economists and the Powerful
by Norbert Haring, Norbert H. Ring and Niall Douglas · 30 Sep 2012 · 261pp · 103,244 words
The Irrational Economist: Making Decisions in a Dangerous World
by Erwann Michel-Kerjan and Paul Slovic · 5 Jan 2010 · 411pp · 108,119 words
Engineering Security
by Peter Gutmann
The Inner Lives of Markets: How People Shape Them—And They Shape Us
by Tim Sullivan · 6 Jun 2016 · 252pp · 73,131 words
Fooled by Randomness: The Hidden Role of Chance in Life and in the Markets
by Nassim Nicholas Taleb · 1 Jan 2001 · 111pp · 1 words
The Middleman Economy: How Brokers, Agents, Dealers, and Everyday Matchmakers Create Value and Profit
by Marina Krakovsky · 14 Sep 2015 · 270pp · 79,180 words
How Markets Fail: The Logic of Economic Calamities
by John Cassidy · 10 Nov 2009 · 545pp · 137,789 words
The Education of a Value Investor: My Transformative Quest for Wealth, Wisdom, and Enlightenment
by Guy Spier · 8 Sep 2014 · 240pp · 73,209 words
Super Thinking: The Big Book of Mental Models
by Gabriel Weinberg and Lauren McCann · 17 Jun 2019
The Sense of Style: The Thinking Person's Guide to Writing in the 21st Century
by Steven Pinker · 1 Jan 2014 · 477pp · 106,069 words
People, Power, and Profits: Progressive Capitalism for an Age of Discontent
by Joseph E. Stiglitz · 22 Apr 2019 · 462pp · 129,022 words
On the Edge: The Art of Risking Everything
by Nate Silver · 12 Aug 2024 · 848pp · 227,015 words
The AI Economy: Work, Wealth and Welfare in the Robot Age
by Roger Bootle · 4 Sep 2019 · 374pp · 111,284 words
The Bottom Billion: Why the Poorest Countries Are Failing and What Can Be Done About It
by Paul Collier · 26 Apr 2007 · 222pp · 75,561 words
Networks, Crowds, and Markets: Reasoning About a Highly Connected World
by David Easley and Jon Kleinberg · 15 Nov 2010 · 1,535pp · 337,071 words
Profiting Without Producing: How Finance Exploits Us All
by Costas Lapavitsas · 14 Aug 2013 · 554pp · 158,687 words
Empirical Market Microstructure: The Institutions, Economics and Econometrics of Securities Trading
by Joel Hasbrouck · 4 Jan 2007 · 209pp · 13,138 words
Corporate Warriors: The Rise of the Privatized Military Industry
by Peter Warren Singer · 1 Jan 2003 · 482pp · 161,169 words
Triumph of the Optimists: 101 Years of Global Investment Returns
by Elroy Dimson, Paul Marsh and Mike Staunton · 3 Feb 2002 · 353pp · 148,895 words
The Case Against Education: Why the Education System Is a Waste of Time and Money
by Bryan Caplan · 16 Jan 2018 · 636pp · 140,406 words
The Great Reversal: How America Gave Up on Free Markets
by Thomas Philippon · 29 Oct 2019 · 401pp · 109,892 words
Electronic and Algorithmic Trading Technology: The Complete Guide
by Kendall Kim · 31 May 2007 · 224pp · 13,238 words
The Little Book of Common Sense Investing: The Only Way to Guarantee Your Fair Share of Stock Market Returns
by John C. Bogle · 1 Jan 2007 · 356pp · 51,419 words
The Sharing Economy: The End of Employment and the Rise of Crowd-Based Capitalism
by Arun Sundararajan · 12 May 2016 · 375pp · 88,306 words
Radical Markets: Uprooting Capitalism and Democracy for a Just Society
by Eric Posner and E. Weyl · 14 May 2018 · 463pp · 105,197 words
SuperFreakonomics
by Steven D. Levitt and Stephen J. Dubner · 19 Oct 2009 · 302pp · 83,116 words
The Economics of Inequality
by Thomas Piketty and Arthur Goldhammer · 7 Jan 2015 · 165pp · 45,129 words
Cybersecurity: What Everyone Needs to Know
by P. W. Singer and Allan Friedman · 3 Jan 2014 · 587pp · 117,894 words
Going Infinite: The Rise and Fall of a New Tycoon
by Michael Lewis · 2 Oct 2023 · 263pp · 92,618 words
Confidence Game: How a Hedge Fund Manager Called Wall Street's Bluff
by Christine S. Richard · 26 Apr 2010 · 459pp · 118,959 words
The Healing of America: A Global Quest for Better, Cheaper, and Fairer Health Care
by T. R. Reid · 15 Aug 2009 · 294pp · 85,811 words
Topics in Market Microstructure
by Ilija I. Zovko · 1 Nov 2008 · 119pp · 10,356 words
The Undercover Economist: Exposing Why the Rich Are Rich, the Poor Are Poor, and Why You Can Never Buy a Decent Used Car
by Tim Harford · 15 Mar 2006 · 389pp · 98,487 words
Rethinking the Economics of Land and Housing
by Josh Ryan-Collins, Toby Lloyd and Laurie Macfarlane · 28 Feb 2017 · 346pp · 90,371 words
America's Bitter Pill: Money, Politics, Backroom Deals, and the Fight to Fix Our Broken Healthcare System
by Steven Brill · 5 Jan 2015 · 554pp · 167,247 words
Humans as a Service: The Promise and Perils of Work in the Gig Economy
by Jeremias Prassl · 7 May 2018 · 491pp · 77,650 words
Handbook of Modeling High-Frequency Data in Finance
by Frederi G. Viens, Maria C. Mariani and Ionut Florescu · 20 Dec 2011 · 443pp · 51,804 words
Brilliant, Crazy, Cocky: How the Top 1% of Entrepreneurs Profit From Global Chaos
by Sarah Lacy · 6 Jan 2011 · 269pp · 77,876 words
Red-Blooded Risk: The Secret History of Wall Street
by Aaron Brown and Eric Kim · 10 Oct 2011 · 483pp · 141,836 words
City: Urbanism and Its End
by Douglas W. Rae · 15 Jan 2003 · 537pp · 200,923 words
The Bankers' New Clothes: What's Wrong With Banking and What to Do About It
by Anat Admati and Martin Hellwig · 15 Feb 2013 · 726pp · 172,988 words
Evil by Design: Interaction Design to Lead Us Into Temptation
by Chris Nodder · 4 Jun 2013 · 254pp · 79,052 words
Flash Boys: Not So Fast: An Insider's Perspective on High-Frequency Trading
by Peter Kovac · 10 Dec 2014 · 200pp · 54,897 words
The White Man's Burden: Why the West's Efforts to Aid the Rest Have Done So Much Ill and So Little Good
by William Easterly · 1 Mar 2006
A Little History of Economics
by Niall Kishtainy · 15 Jan 2017 · 272pp · 83,798 words
Information: A Very Short Introduction
by Luciano Floridi · 25 Feb 2010 · 137pp · 36,231 words
Beyond the Random Walk: A Guide to Stock Market Anomalies and Low Risk Investing
by Vijay Singal · 15 Jun 2004 · 369pp · 128,349 words
The Meritocracy Trap: How America's Foundational Myth Feeds Inequality, Dismantles the Middle Class, and Devours the Elite
by Daniel Markovits · 14 Sep 2019 · 976pp · 235,576 words
Luxury Fever: Why Money Fails to Satisfy in an Era of Excess
by Robert H. Frank · 15 Jan 1999 · 416pp · 112,159 words
Tyler Cowen-Discover Your Inner Economist Use Incentives to Fall in Love, Survive Your Next Meeting, and Motivate Your Dentist-Plume (2008)
by Unknown · 20 Sep 2008 · 246pp · 116 words
The End of Loser Liberalism: Making Markets Progressive
by Dean Baker · 1 Jan 2011 · 172pp · 54,066 words
The Future of Technology
by Tom Standage · 31 Aug 2005
The Devil's Derivatives: The Untold Story of the Slick Traders and Hapless Regulators Who Almost Blew Up Wall Street . . . And Are Ready to Do It Again
by Nicholas Dunbar · 11 Jul 2011 · 350pp · 103,270 words
Do More Faster: TechStars Lessons to Accelerate Your Startup
by Brad Feld and David Cohen · 18 Oct 2010 · 326pp · 74,433 words
When to Rob a Bank: ...And 131 More Warped Suggestions and Well-Intended Rants
by Steven D. Levitt and Stephen J. Dubner · 4 May 2015 · 306pp · 85,836 words
State-Building: Governance and World Order in the 21st Century
by Francis Fukuyama · 7 Apr 2004