Recommendation Service as a Coordination Device among Peers

Elias Carroni, Giuseppe Pignataro and Alessandro Tampieri

Working Papers - Economics from Universita' degli Studi di Firenze, Dipartimento di Scienze per l'Economia e l'Impresa

Abstract: In the classic beauty contest story of Morris and Shin (2002), the coordination game is set exogenously in the payoff function of agents. Our paper studies the existence of endogenous coordination in a context with one seller and many buyers. Due to imperfect information, the seller has an incentive to take a manipulative action to bias the product’s quality. We show that a direct relationship between the seller and buyers does not induce them to coordinate to understand the product’s value better. Coordination may occur if and only if a platform’s intermediation is in place, as its recommendation to buyers unravels the beneficial effects of the others’ documentation efforts. The platform’s service works as a coordination device among peers. We finally model the combination of private and public signals with a platform’s recommendation. The platform can have a preference for a peer-review system or an individual learning strategy, depending on the seller’s ability to manipulate.

Keywords: Coordination Games; Recommendation; Platform; Manipulation; Bayesian Learning; Peer-Review. (search for similar items in EconPapers)
JEL-codes: D42 D82 D83 L13 M37 (search for similar items in EconPapers)
Pages: 41 pages
Date: 2020
New Economics Papers: this item is included in nep-com, nep-mic, nep-pay and nep-ure
References: Add references at CitEc
Citations:

Downloads: (external link)
https://www.disei.unifi.it/upload/sub/pubblicazioni/repec/pdf/wp06_2020.pdf (application/pdf)

Related works:
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:frz:wpaper:wp2020_06.rdf

Access Statistics for this paper

More papers in Working Papers - Economics from Universita' degli Studi di Firenze, Dipartimento di Scienze per l'Economia e l'Impresa Via delle Pandette 9 50127 - Firenze - Italy. Contact information at EDIRC.
Bibliographic data for series maintained by Giorgio Ricchiuti ().