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Lemons Markets and the Transmission of Aggregate Shocks

Kurlat, Pablo - In: American Economic Review 103 (2013) 4, pp. 1463-89

I study a dynamic economy featuring adverse selection in asset markets. Borrowing-constrained entrepreneurs sell past projects to finance new investment, but asymmetric information creates a lemons problem. I show that this friction is equivalent to a tax on financial transactions. The implicit...

Persistent link: https://www.econbiz.de/10010666614

Information Disclosure as a Matching Mechanism: Theory and Evidence from a Field Experiment

Tadelis, Steven; Zettelmeyer, Florian - In: American Economic Review 105 (2015) 2, pp. 886-905

Market outcomes depend on the quality of information available to its participants. We measure the effect of … information disclosure on market outcomes using a large-scale field experiment that randomly discloses quality information in … vertically ranked by quality. This implies that information disclosure helps match heterogeneous buyers to cars of varying …

Persistent link: https://www.econbiz.de/10011156805

Adverse Selection in Durable Goods Markets

Lizzeri, Alessandro; Hendel, Igal - In: American Economic Review 89 (1999) 5, pp. 1097-1115

We present a dynamic model of adverse selection to examine the interactions between new and used goods markets. We find that the used market never shuts down, the volume of trade can be large, and distortions are lower than previously thought. New cars prices can be higher under adverse...

Persistent link: https://www.econbiz.de/10005820311

Promotional Reviews: An Empirical Investigation of Online Review Manipulation

Mayzlin, Dina; Dover, Yaniv; Chevalier, Judith - In: American Economic Review 104 (2014) 8, pp. 2421-55

Firms' incentives to manufacture biased user reviews impede review usefulness. We examine the differences in reviews for a given hotel between two sites: Expedia.com (only a customer can post a review) and TripAdvisor.com (anyone can post). We argue that the net gains from promotional reviewing...

Persistent link: https://www.econbiz.de/10010884831

The Market for Evaluations

Resnick, Paul; Avery, Christopher; Zeckhauser, Richard - In: American Economic Review 89 (1999) 3, pp. 564-584

Recent developments in computer networks have driven the cost of distributing information virtually to zero, creating extraordinary opportunities for sharing product evaluations. The authors present pricing and subsidy mechanisms that operate through a computerized market and induce the...

Persistent link: https://www.econbiz.de/10005821092

Information and Quality When Motivation Is Intrinsic: Evidence from Surgeon Report Cards

Kolstad, Jonathan T. - In: American Economic Review 103 (2013) 7, pp. 2875-2910

If profit maximization is the objective of a firm, new information about quality should affect firm behavior only … well in addition to profit. The introduction of quality "report cards" for cardiac surgery in Pennsylvania provides an …

Persistent link: https://www.econbiz.de/10010720106

Standardization in Decentralized Economies

Benaim, Michel; Auriol, Emmanuelle - In: American Economic Review 90 (2000) 3, pp. 550-570

This paper presents a dynamic model, inspired by evolutionary game theory, of how standards and norms emerge in decentralized economies. It shows that standardization outcomes depend on adopters' attitudes to problems caused by incompatibility. If individuals display aversion to incompatibility,...

Persistent link: https://www.econbiz.de/10005563291

Behavioral Constraints on the Design of Subgame-Perfect Implementation Mechanisms

Fehr, Ernst; Powell, Michael; Wilkening, Tom - In: American Economic Review 111 (2021) 4, pp. 1055-1091

We study subgame-perfect implementation (SPI) mechanisms that have been proposed as a solution to incomplete contracting problems. We show that these mechanisms, which are based on off-equilibrium arbitration clauses that impose large fines for lying and the inappropriate use of arbitration,...

Persistent link: https://www.econbiz.de/10013502140

Not Only What but Also When: A Theory of Dynamic Voluntary Disclosure

Guttman, Ilan; Kremer, Ilan; Skrzypacz, Andrzej - In: American Economic Review 104 (2014) 8, pp. 2400-2420

We examine a dynamic model of voluntary disclosure of multiple pieces of private information. In our model, a manager of a firm who may learn multiple signals over time interacts with a competitive capital market and maximizes payoffs that increase in both period prices. We show (perhaps...

Persistent link: https://www.econbiz.de/10010884826

Man-Bites-Dog Business Cycles

Nimark, Kristoffer P. - In: American Economic Review 104 (2014) 8, pp. 2320-67

The newsworthiness of an event is partly determined by how unusual it is and this paper investigates the business cycle implications of this fact. Signals that are more likely to be observed after unusual events may increase both uncertainty and disagreement among agents. In a simple business...

Persistent link: https://www.econbiz.de/10010884829

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