Article history: Accepted 17 September 2013 JEL classifications: L13 L15

Digitization has led to many new creative products, straining the capacity of professional critics and consumers. Yet, digitization retailing also delivered crowd-based sources pre-purchase information. We compare relative impacts Amazon star ratings on consumer welfare in book publishing. Using various fixed effects discontinuity-based empirical strategies, we estimate their causal sales. use ...

Fraud is an ancient crime and one that annually causes hundreds of billions of dollars in losses. We examine the behavioral patterns over time of different types of frauds, which illustrate cyclical frequencies. We develop an evolutionary theory that suggests cyclic behavior in frauds should be common. JEL classifications: D92, L15, P17

Standard pricing theories consider consumers without temptation. With temptation and costly self-control, consumers dislike choice sets with tempting alternatives. We study firms’ strategy against such consumers, using Gul–Pesendorfer preferences and a game where firms compete by offering menus. JEL Classification: D43, L13, L15

Sellers often have the power to censor reviews of their products. We explore effect these censorship policies in markets where some consumers are unaware possible censorship. find that if share such “naïve” is not too large, then rational treat any bad review revealed equilibrium as good news about product quality. This makes worth revealing and allows seller use them signal his product’s quali...

We study the life cycle of a firm that produces good unknown quality. The manages its quality by investing while consumers learn via public breakthroughs; if fails to generate such breakthroughs, revenue falls and it eventually exits. Optimal investment depends on firm’s reputation (the market’s belief about quality) self-esteem own quality), is single-peaked in time since breakthrough. derive ...

It is well established in vertical product differentiation models that the high-quality firm reaps a larger profit in a two-stage quality-price game as long as the cost of quality improvement is zero or is borne as fixed cost in the first stage quality choice. This note shows that the highquality advantage may fail to hold if there is variable cost of production that is dependent on quality. JE...

We analyze the e ects of a legally-binding price oor using Hotelling's model of locational competition. A moderate priceoor destroys the maximal di erentiation equilibrium of d'Aspremont et. al., by allowing rms to compete more aggressively for market share. Minimum di erentiation results, with lower equilibrium prices. A low price oor results in mulitiple equilibria both minimum and maximum di...

When real estate agent effort is unobservable, home sellers do not prefer the lowest possible commission rate because such a rate does not induce sufficient effort from agents. As a result, the optimal commission from the seller’s perspective exhibits downward rigidity, even if there is free entry. The analysis shows that downward rigidity will occur if and only if the quasi-fixed costs of sell...

Theoretically and experimentally, we generalize the analysis of acquiring a company (Samuelson and Bazerman 1985) by allowing for competition of both, buyers and sellers. Näıvety of both is related to the idea that higher prices exclude worse qualities. While competition of näıve buyers increases prices, competition of näıve sellers promotes efficiency enhancing trade. Our predictions are teste...