A Model of Biased Intermediation

Alexandre de Cornière, and Greg Taylor

No 11457, CEPR Discussion Papers from C.E.P.R. Discussion Papers

Abstract: We study situations in which consumers rely on a biased intermediary's advice when choosing among sellers. We introduce the notion that sellers' and consumers' payoffs can be \textit{congruent} or \textit{conflicting}, and show that this has important implications for the effects of bias. Under congruence, the firm benefiting from bias has an incentive to offer a better deal than its rival and consumers can be better-off than under no bias. Under conflict, the favored firm offers lower utility and bias harms consumers. We study various policies for dealing with bias and show that their efficacy also depends on whether the payoffs exhibit congruence or conflict.

Keywords: Intermediary; Bias; Regulation (search for similar items in EconPapers)
JEL-codes: D21 L15 L40 (search for similar items in EconPapers)
Date: 2016-08
New Economics Papers: this item is included in nep-com, nep-ind, nep-mic and nep-ore
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (2)

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Journal Article: A model of biased intermediation (2019)
Working Paper: A Model of Biased Intermediation (2019)
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