We study the optimal provision of information in a procurement auction with horizontally differentiated goods. The buyer has private information about her preferred location on the product space and has access to a costless communication device. A seller who pays the entry cost may submit a bid comprising a location and a minimum price. We characterize the optimal information structure and show that the buyer prefers to attract only two bids. Further, additional sellers are inefficient since they reduce total and consumer surplus, gross of entry costs. We show that the buyer will not find it optimal to send public information to all sellers. On the other hand, she may profit from setting a minimum price and that a severe hold-up problem arises if she lacks commitment to set up the rules of the auction ex ante.

We assess the extent of discrimination against gay and transgender individuals in the rental housing markets of four Latin American countries. We conducted a large-scale field experiment building on the correspondence study methodology to examine interactions between property managers and fictitious couples engaged in searches on a major online rental housing platform. We find evidence of discriminatory behavior against heterosexual couples where the female partner is a transgender woman (trans couples): they receive 19% fewer responses, 27% fewer positive responses, and 23% fewer invitations to showings than heterosexual couples. However, we find no evidence of discrimination against gay male couples. We also assess whether the evidence is consistent with taste-based discrimination or statistical discrimination models by comparing response rates when couples signal high socioeconomic status (high SES). While we find no significant effect of the signal on call-back rates or the type of response for high-SES heterosexual or gay male couples, trans couples benefit when they signal high SES. Their call-back, positive-response, and invitation rates increase by 25%, 36% and 29%, respectively. These results suggest the presence of discrimination against trans couples in the Latin American online rental housing market, which seems consistent with statistical discrimination. Moreover, we find no evidence of heterosexual couples being favored over gay male couples, nor evidence of statistical discrimination for gay male or heterosexual couples.

We analyze a monopolist's pricing and product reliability decision in a model where consumers are entitled to product replacement if the product fails, but have heterogeneous costs of exercising this right. Our main result shows that, under some conditions, a decrease in consumers expected to claim cost leads to a decrease in product reliability but an increase in profit and welfare. This result is robust to a number of extensions. Our results are in line with anecdotal evidence suggesting that changes in consumers’ claiming cost can be induced by both third parties (governments, consumers’ organizations, private enterprises, etc.) and firms. More precisely, since, under some conditions, profit and welfare align, public initiatives oriented to lower consumers’ claiming cost will be ultimately joined by firms that benefit from further increases in complaints.

No abstract

No abstract