Andrea Di Giovan Paolo

We study information disclosure in competitive markets with adverse selection. Sellers privately observe product quality, with higher quality entailing higher production costs, while buyers trade at the market-clearing price after observing a public signal. Because sellers’ participation in trade conveys information about quality, the designer faces endogenous constraints in the set of posteriors that she can induce. We reformulate the designer’s problem as a martingale optimal transport exercise with an additional condition that rules out further information transmission through sellers’ participation decisions, and characterize the optimal signals. When the designer maximizes trade volume, the solution features negative-assortative matching of inefficient and efficient sellers. When the objective is a weighted combination of price and surplus, optimal signals preserve this structure as long as the weight on the price is high enough, otherwise they fully reveal low-quality types while pooling middle types with high-quality sellers.

This paper analyzes optimal insurance design when the insurer internalizes the effect of coverage on third-party service prices. A monopolistic insurer contracts with risk-averse agents who have sequential two-dimensional private information and preferences represented by Yaari’s dual utility. Insurance contracts shape service demand and, through a market-clearing condition, determine equilibrium third-party prices. We show that contracts take simple forms —either full coverage after a deductible is paid or limited coverage with an out-of-pocket maximum— closely mirroring real-world insurance plans. Technically, we formulate the problem as a sequential screening model and solve it using tools from optimal transport theory.

We study employer discrimination based on expectations about women’s future fertility. The identification challenge is that expectations about fertility cannot be varied independently of the characteristics from which employers infer them. We show that discrimination can be identified from variation in employers’ cost of future fertility, without requiring variation in fertility expectations. We exploit the Pregnancy Discrimination Act of 1978, which first provided federal employment protection to pregnant workers, raising firms’ expected costs of employing women more likely to become pregnant. Using a difference-in-differences design comparing newly affected states with states that already had comparable protections, we find that the PDA reduced employment among women of childbearing age by 6.6%, primarily through lower hiring. The decline is concentrated among women with higher predicted future fertility, while employment of men and older women is largely unaffected. Our estimates imply that expected-fertility discrimination accounts for at least 27% of the observed gender employment gap.