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Clements, Matthew T. - 2010

If a product has two dimensions of quality, one observable and one not, a firm can use observable quality as a signal of unobservable quality. The correlation between consumers' valuation of high quality in each dimension is a key determinant of the feasibility of such signaling. A firm may use...

Persistent link: https://www.econbiz.de/10013135066

Asymmetry of Reputation Loss and Recovery under Endogenous Partnerships : Theory and Evidence

Fujiwara-Greve, Takako - 2014

This paper is inspired by real-world phenomena that firms lose customers based on imprecise information and take a long time to recover. If consumers are playing an ordinary repeated game with fixed partners, there is no clear reason why recovery slowly happens. However, if consumers are playing...

Persistent link: https://www.econbiz.de/10013070352

Products Liability, Signaling and Disclosure

Daughety, Andrew F. - 2007

In this paper we examine the behavior of a firm that produces a product with a privately-observed safety attribute; that is, consumers cannot observe directly the product's safety. The firm may, at a cost, disclose its safety prior to sale; alternatively, if a firm does not disclose its safety...

Persistent link: https://www.econbiz.de/10012731013

Identifying a Model of Screening with Multidimensional Consumer Heterogeneity

Aryal, Gaurab - 2018

In this paper we study the identification of a screening model with multidimensional unobserved consumer heterogeneity, using transaction level data and consumers' socio-economic characteristics. In multidimensional screening a seller of a multi-attribute product “screens” by offering a menu...

Persistent link: https://www.econbiz.de/10012937645

Low Quality as a Signal of High Quality

Clements, Matthew T. - 2011

Persistent link: https://www.econbiz.de/10013210314

Price Signalling Differentiated Experience Goods : Are Uniform Movie Prices a Puzzle?

Park, In-Uck - 2020

price equilibrium and a price signalling equilibrium coexist. This is in contrast to the received wisdom that price … signalling of quality is nonviable in static settings. We also show that the seller's profit is always higher in the price … signalling equilibrium than in the uniform price equilibrium, but the consumer surplus and social welfare may be higher in either …

Persistent link: https://www.econbiz.de/10012829510

Reexamining the Schmalensee effect

Kim, Jeong-yoo; Berg, Nathan - 2017

The authors reexamine the Schmalensee effect from a dynamic perspective. Schmalsensee’s argument suggesting that high quality can be signaled by high prices is based on the assumption that higher quality necessarily incurs higher production cost. In this paper, the authors argue that firms...

Persistent link: https://www.econbiz.de/10011629415

Reexamining the Schmalensee effect

Kim, Jeong-yoo - 2017

The author reexamines the Schmalensee effect from a dynamic perspective. Schmalsensee’s argument suggesting that high quality can be signaled by high prices is based on the assumption that higher quality necessarily incurs higher production cost. In this paper, the author argues that firms...

Persistent link: https://www.econbiz.de/10011592700

Signals sell : product lines when consumers differ both in taste for quality and image concern

Friedrichsen, Jana - 2018

This paper analyzes optimal product lines when consumers differ both in their taste for quality and in their desire for social image. The market outcome features partial pooling and product differentiation that is not driven by heterogeneous valuations for quality but by image concerns. A...

Persistent link: https://www.econbiz.de/10011899163

Entry and Quality Signalling When Only Some Consumers are Informed of the Entrant's Quality

Wu, Fulan - 2016

This paper focuses on competition between an incumbent and an entrant when only the entrant's quality is unknown to (some) consumers. The incumbent may or may not know the entrant's quality. The model reveals a separating equilibrium where the entrant's high price signals its high quality when...

Persistent link: https://www.econbiz.de/10014126519