Opportunity Unraveled: Private Information and the Missing Markets for Financing Human Capital
研究逆向选择是否导致高等教育股权和或有债务合同私人市场崩溃，发现典型大学生每融资1美元需偿还1.64美元现值，风险规避者不愿接受，市场因此消失。
We examine whether adverse selection has unraveled private markets for equity and state-contingent debt contracts for financing higher education. Using survey data on beliefs, we show a typical college-goer would have to repay $1.64 in present value for every $1 of financing to overcome adverse selection in an equity market. We find that risk-averse college-goers are not willing to accept these terms, so markets unravel. We discuss why moral hazard, biased beliefs, and outside credit options are less likely to explain the absence of these markets. We quantify the welfare gains for subsidizing equity-like contracts that mitigate college-going risks.