This short paper shows that in an affiliated value setting one more bidder at the auction stage need not induce a higher expected welfare in either ascending price or second price auctions. We highlight the roles of asymmetries between bidders and of the multidimensional character of the private...

Reciprocal customers may disproportionately improve the performance of markets for experience goods. Reciprocal customers reward (punish) firms for providing good (bad) quality by upholding (terminating) the customer relation. This may induce firms to provide good quality which, in turn, may...

We study the effects of reputation and competition in a stylized market for experience goods. If interaction is anonymous, such markets perform poorly: sellers are not trustworthy, and buyers do not trust sellers. If sellers are identifiable and can, hence, build a reputation, efficiency...