Information about sellers' past behavior in the market for lemons
Journal of Economic Theory, 2017, vol. 169, issue C, 365-399
This paper studies the role of time-on-the-market information in dynamic trading environments under adverse selection. I consider a sequential search model in which (informed) sellers receive price offers from (uninformed) buyers and analyze both the case in which buyers receive no information about sellers' trading histories and the case in which buyers observe sellers' time-on-the-market. I analyze how the observability of time-on-the-market influences agents' trading behavior and investigate its welfare implications in both the single-seller environment and the stationary market environment.
Keywords: Adverse selection; Sequential search; Time-on-the-market (search for similar items in EconPapers)
JEL-codes: C78 D82 D83 (search for similar items in EconPapers)
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Persistent link: https://EconPapers.repec.org/RePEc:eee:jetheo:v:169:y:2017:i:c:p:365-399
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