We construct a laboratory market with the structure of the theoretical model of Burdett, Shi, and Wright (2001). The model is a simple and natural way to represent a market in which there is a friction in the matching process between buyers and sellers. Sellers first simultaneously post prices at which they are willing to sell their single unit of a good. Buyers then simultaneously choose a sel...

We study the problem of selling an item to strategic buyers in the presence of positive historical externalities, where the value of a product increases as more people buy and use it. This increase in the value of the product is the result of resolving bugs or security holes after more usage. We consider a continuum of buyers that are partitioned into types where each type has a valuation funct...

Online transaction environment is full of uncertainties. To reduce online uncertainty, the first stage model examines the effect of extrinsic signals on perceived product quality, and the second stage model employs cue-diagnosticity framework to examine the influence of eWOM attributes (eWOM volume and eWOM consensus) on both perceived product quality and purchase intention. Our research questi...

We consider a 2-period model in which buyers can store the good by purchasing in advance of consumption so as to realize potential gains from inter-temporal arbitrage. We find that storability introduces a kink in the aggregate period-1 demand. When supply is oligopolistic (quantity setting) and consumers are sufficiently patient (storage cost is relatively low) then each firm has a strong curr...

I a stylized model of biopharmaceutical contract manufacturing, this paper shows how the potential for renegotiation influences the optimal structure of supply contracts, investments in innovation and capacity, the way scarce capacity is allocated, and firms’ resulting profits. Two buyers contract for capacity with a common manufacturer. Then, the buyers invest in innovation (product developmen...

On the basis of a low probability insurance experiment with substantial money on the line, we demonstrate that concern is an important driver of willingness to pay (WTP) for insurance when there is ambiguity surrounding the estimate. Concern still plays an important role when probabilities are given precisely. This finding explains why some individuals pay too much and others little for insuran...

This paper considers platform competition in a two-sided market that includes buyers and sellers. One of the platforms benefits from a partial belief advantage, in that each side believes that it is more likely that the other side will join the advantaged platform. We find that the degree of the platform’s belief advantage affects its decision regarding the business model (i.e., whether to subs...