EconPapers    
Economics at your fingertips  
 

MEMORY AND MARKETS

Sergey Kovbasyuk and Giancarlo Spagnolo ()
Additional contact information
Giancarlo Spagnolo: SITE-Stockholm School of Economics, EIEF, Tor Vergata & CEPR

No w0284, Working Papers from New Economic School (NES)

Abstract: In many environments, including credit and online markets, past records about participants are collected, published, and erased after some time. We study the effects of erasing past records in a dynamic market where sellers' quality follows a Markov process and buyers leave feedback about sellers to an information intermediary. When the average quality of sellers is low, unlimited records lead to a market breakdown in the long run. We consider the general information design problem and characterize information policies that can sustain trade and that maximize welfare. These policies hide some information from the market in order to foster socially desirable experimentation. We show that these outcomes can be implemented by appropriately deleting observable past records. Crucially, positive and negative records play opposite roles with different intensity and must have different length: negative records must be sufficiently long, and positive records sufficiently short.

Keywords: Limited records; rating systems; information design; credit registers; privacy; data retention; online reputation; market experimentation (search for similar items in EconPapers)
JEL-codes: D53 D82 G20 G28 K35 L14 L15 (search for similar items in EconPapers)
Pages: 60 pages
Date: 2021-11
New Economics Papers: this item is included in nep-com and nep-mic
References: View references in EconPapers View complete reference list from CitEc
Citations:

Downloads: (external link)
https://www.nes.ru/files/Preprints-resh/WP284.pdf (application/pdf)

Related works:
Working Paper: Memory and Markets (2017) Downloads
Working Paper: Memory and Markets (2017) Downloads
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link: https://EconPapers.repec.org/RePEc:abo:neswpt:w0284

Access Statistics for this paper

More papers in Working Papers from New Economic School (NES) Contact information at EDIRC.
Bibliographic data for series maintained by Vladimir Ivanyukhin ( this e-mail address is bad, please contact ).

 
Page updated 2024-07-13
Handle: RePEc:abo:neswpt:w0284