In a marketplace of repeated transactions with asymmetric information, theory predicts that sellers with a good reputation have a higher probability of sale and receive a higher transaction price. In this paper, I test this theory using more than 55,000 auctions of “Gmail invitations” on eBay, essentially a market of homogeneous goods with non-enforceable contracts. This is an ideal environment...

Insurance markets are characterized by profound market imperfections. Insurance intermediaries reduce transaction costs and information asymmetries. From transaction cost economics, agency theory, and law and economics literature the hypothesis is derived that insurance brokers may provide more high-quality information and advisory services which are better suited for the needs of the consumers...

We develop and evaluate a test of choice set misspecification for a multinomial logit choice model. This test determines whether the choice set designated by the researcher mistakenly assigns relevant substitutes to the numeraire good. We develop this test by generalizing the traditional McFadden-type conditional logit model to evaluate whether the traditional model is conditioned on an overly ...

The aim of this paper is to analyze the determining factors for the pricing of handsets sold with service plans, using the hedonic price method. This was undertaken by building a database comprising 48 handset models, under nine different service plans, over a period of 53 weeks in 2008, and resulted in 27 different attributes and a total number of nearly 300,000 data registers. The results sug...

In a durable good market where sellers have private information about quality, I identify certain problems in dynamic trading and sorting that arise in the presence of heterogeneity among buyers. Higher valuation buyers may have have lower incentive to wait to buy better quality at a later time period. As a result, even though higher quality sellers may wait to sell later at higher prices and d...

Sellers often make explicit or implicit product claims without providing evidence. Even when such “puffery” is pure cheap talk, we find it can be credible and help buyers make a better decision. Talking up one attribute of a product leads rational buyers to have a better impression of the product on that attribute, but also to have a worse impression of the product on other attributes. Such upd...

This paper evaluates the effects of the FAMEX export promotion program in Tunisia on the performance of beneficiary firms. While much of the literature assesses only the short-term impact of such programs, the paper considers also the longer-term impact. Propensity-score matching, difference-in-difference, and weighted least squares estimates suggest that beneficiaries initially see faster expo...

In the recent past there have been numerous scandals around bad practices in the food industry. Although it can be easily rationalized why these bad practices have not been reported by the inflictors themselves, it is more difficult to understand why the noninflicting competitors did not report their rivals’ conspicuous acts. In this paper we study these competitors’ incentives to acquire and t...

We examine the performance of large credit markets subject to borrower moral hazard, when information on the past behavior of borrowers is subject to bounded memory constraints. Borrowers who default should be temporarily excluded in order to efficiently incentivize repayment. However, lenders have an incentive to lend to borrowers who are near the end of their exclusion period, undermining thi...

Feedback mechanisms in electronic markets allow trading partners to rate each other after a transaction and to observe past ratings given by other market participants. Such mechanisms are considered crucial for the success of internet trading platforms, where alternative governance methods are often missing or too expensive. However, the concern has been raised that on eBay positive feedbacks m...