Asymmetric Information, Adverse Selection and Online Disclosure: The Case of eBay Motors

Lewis, Gregory

doi:10.1257/aer.101.4.1535

Cited by 225 publications

(140 citation statements)

References 15 publications

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“…It is well established that information can help consumers better evaluate the value of goods and services they are interested in, resulting in more appropriate purchases. It can also significantly help buyers to choose which market to participate in, and it can affect the elasticity of demand (Johnson and Myatt, 2006;Lewis, 2011;Tadelis and Zettelmeyer, 2011). Ashraf et al (2013) examined information and subsidy as complements in health interventions and found that information can significantly increase the impact of price subsidies on purchases of healthy products (the impact of price subsidies was 60% larger among the informed households).…”

Section: Introductionmentioning

confidence: 99%

Fat tax, subsidy or both? The role of information and children's pester power in food choice

Papoutsi

Nayga

Lazaridis

et al. 2015

Journal of Economic Behavior & Organization

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Using a discrete choice experiment with real economic incentives, this paper studies how food fiscal policies and external influences (such as pestering and information) can affect parental choice of food for their child. Using pairs of a parent and child, the experimental design varies the food prices of healthier and unhealthier alternatives of food products for children as part of specific food fiscal policies. We then examine the interplay of children's pester power as well as information about the fiscal policies. The results from our lab experiment suggest that (a) implementing a fat tax and a subsidy simultaneously can shift parental behavior to healthier food products to a greater degree than a fat tax or a subsidy alone, (b) providing information regarding the food fiscal policies can further increase the impact of the intervention, and (c) child pestering is one of the causes of the moderate effectiveness of the policies as it strongly affects parents in making unhealthier choices.

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Section: Introductionmentioning

confidence: 99%

Fat tax, subsidy or both? The role of information and children's pester power in food choice

Papoutsi

Nayga

Lazaridis

et al. 2015

Journal of Economic Behavior & Organization

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“…The main issue that many researchers have discussed is the problem of information asymmetry and the subsequent adverse selection by the buyer ( [12]; [14]). Many prior studies have identified the existence of adverse selection problem in off-line markets for products having a certain higher level of complexity, for example the markets for used cars ( [4]; [8]; [9]).…”

Section: Performance Of Auction Sitesmentioning

confidence: 99%

“…The study by Lewis [14] suggests that when sellers voluntarily disclose private information through photos, text and other media formats, a precise contract is defined to protect the buyer from adverse selection. This increases the probability of a higher price premium being achieved.…”

Section: Performance Of Auction Sitesmentioning

confidence: 99%

“…Therefore the information exchanged in these interactions can be used only for future auctions, assuming that sellers and buyers participate in the auction market in the long run. Another issue about feedback systems is that it helps to enforce an implicit contract only between the buyer and seller; it is just buyer"s perception that a highly rated seller is less likely to take part in fraud or other types of opportunistic activities, while there is no clearly defined and expressed contract [14].…”

Section: Conceptual Frameworkmentioning

confidence: 99%

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Stakeholder interaction and internet auction outcomes

Srinivasan

Liu

2011

Proceedings of the 13th International Conference on Electronic Commerce

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Better understanding of information asymmetry in internet auctions by researchers has led to improved online auction designs, increased market efficiency, and therefore better outcomes for all stakeholders. In this paper we focus on a specific aspect of internet auctions that has not received much attention in the literature: the presence of interaction between buyers and sellers while an auction is in progress -so called "live interaction". Examples of such interaction include characteristics of questions from buyers, answers and other disclosures from sellers, conversation threads, etc. We believe that such interaction differentiates active disclosure from seller volunteered information (passive disclosure). The facilitation of live interaction is a feature of the auction site TradeMe which represents 60% of all internet traffic in New Zealand. We collected data from 532 auctions of used cars over a three week period. In addition to data about the auction itself, we collected data about the number of questions asked and answered, the average length of the questions and answers, number of conversation threads and the use of specific textual triggers in the questions that encompass sentiments such as intent, politeness, and courtesy words. We modeled the problem using logistic regression to isolate live interaction based determinants of auction outcomes. We studied the effects of live interaction variables on outcomes in two ways: by themselves; and embedded in a larger model encompassing more traditional auction characteristics. The results show which specific aspects of live interaction between buyers and sellers are significant in determining auction outcomes. We propose that such interaction is greatly facilitated by the use of mobile devices and building it in as a necessary design feature can produce superior outcomes.

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“…Other work has found that eBay's reputation system has important economic effects (Bajari and Hortacsu (2004)). In recent work on similar data, Lewis (2010) suggests that the adverse selection problem is mitigated by the voluntary disclosure of information by the seller about the car, through the provision of detailed photos and text descriptions. Wolf and Muhanna (2005) argue that there is evidence of lemons problems on eBay Motors.…”

Section: Introductionmentioning

confidence: 99%