Uninformed buyers and market efficiency

Empirical evidence shows that low cost of signaling interest in offers can result in a significant number of inappropriate signals. This paper provides a theoretical explanation for this observation as an equilibrium outcome of a model with utility maximizing fully rational agents that decide to signal their interest without knowing whether the offer suits them or not. We show that falling transaction costs can decrease market efficiency and social welfare.

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Year of publication:	2017
Authors:	Maier, Carl G. ; Marencak, Michal
Publisher:	Kiel, Hamburg : ZBW - Deutsche Zentralbibliothek für Wirtschaftswissenschaften, Leibniz-Informationszentrum Wirtschaft

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Series:	Beiträge zur Jahrestagung des Vereins für Socialpolitik 2017: Alternative Geld- und Finanzarchitekturen - Session: Mechanism Design ; C09-V1
Type of publication:	Book / Working Paper
Type of publication (narrower categories):	Conference Paper
Language:	English
Other identifiers:	hdl:10419/168207 [Handle] RePEc:zbw:vfsc17:168207 [RePEc]
Classification:	C72 - Noncooperative Games ; d47 ; D83 - Search, Learning, Information and Knowledge ; E24 - Employment; Unemployment; Wages
Source:	EconStor

Persistent link: https://www.econbiz.de/10011712720