Reputation vs Selection Effects in Markets with Informational Asymmetries

Theodore Alysandratos, Sotiris Georganas and Matthias Sutter

No 2022_08, Discussion Paper Series of the Max Planck Institute for Research on Collective Goods from Max Planck Institute for Research on Collective Goods

Abstract: In markets with asymmetric information between sellers and buyers, feedback mechanisms are important to increase market efficiency and reduce the informational disadvantage of buyers. Feedback mechanisms might work because of self-selection of more trustworthy sellers into markets with such mechanisms or because of reputational concerns of sellers. In our field experiment, we can disentangle self-selection from reputation effects. Based on 476 taxi rides with four different types of taxis, we can show strong reputation effects on the prices and service quality of drivers, while there is practically no evidence of a self-selection effect. We discuss policy implications of our findings.

Keywords: information asymmetries; reputation mechanisms; selection effects; credence goods; field experiment (search for similar items in EconPapers)
JEL-codes: C93 D82 (search for similar items in EconPapers)
Date: 2022-11-07
New Economics Papers: this item is included in nep-exp
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Related works:
Working Paper: Reputation vs Selection Effects in Markets with Informational Asymmetries (2022)
Working Paper: Reputation vs Selection Effects in Markets With Informational Asymmetries (2022)
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