Market Transparency, Adverse Selection, and Moral Hazard

Tobias Klein, Christian Lambertz and Konrad Stahl

No 14-25, Working Papers from University of Mannheim, Department of Economics

Abstract: We study how seller exit and continuing sellers’ behavior on eBay are affected by an improvement in market transparency. The improvement was achieved by reducing strategic bias in buyer ratings. It led to a significant increase in buyer satisfaction with seller performance, but not to an increase in seller exit. When sellers had the choice between exiting—a reduction in adverse selection—and improving behavior—a reduction in moral hazard—, they preferred the latter because of lower cost. Increasing market transparency improved market outcomes.

Keywords: Anonymous markets; adverse selection; moral hazard; reputation mechanisms; market transparency; market design (search for similar items in EconPapers)
JEL-codes: D47 D83 L15 (search for similar items in EconPapers)
Date: 2014
New Economics Papers: this item is included in nep-com and nep-cta
References: View references in EconPapers View complete reference list from CitEc
Citations:

Downloads: (external link)
https://madoc.bib.uni-mannheim.de/37275/1/Klein%2C_Lambertz%2C_Stahl_14-25.pdf

Related works:
Working Paper: Market Transparency, Adverse Selection, and Moral Hazard (2013)
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:mnh:wpaper:37275

Access Statistics for this paper

More papers in Working Papers from University of Mannheim, Department of Economics Contact information at EDIRC.
Bibliographic data for series maintained by Katharina Rautenberg ().