Quality vs. Quantity in Information Transmission: Theory and Experimental Evidence

Jonathan Lafky and Alistair Wilson

No 5426, CESifo Working Paper Series from CESifo

Abstract: Information sharing has become increasingly important in helping consumers make better, more informed choices over competing products. Our project uses a novel theoretical framework and laboratory experiments to analyze three simple, commonly used incentive schemes against an unincentivized baseline. Each incentive scheme has qualitatively different theoretical predictions for behavior and efficiency, while our laboratory experiments examine the degree to which these differences manifest themselves, and the best-cast theory’s robustness to human behavior. Our findings indicate the possibility for substantial efficiency gains by introducing incentives that reward information sharing, even where those incentives drive a wedge between those sending and those receiving information. In particular, our results point to a misaligned incentive commonly found in the field, sales commissions, as being a robust institution to stimulate the exchange of information.

Keywords: rating incentives; institutional stability; social information (search for similar items in EconPapers)
JEL-codes: C92 D02 D83 (search for similar items in EconPapers)
Date: 2015
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (3)

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Persistent link: https://EconPapers.repec.org/RePEc:ces:ceswps:_5426

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