scholarly journals Asymmetric Information, Adverse Selection and Online Disclosure: The Case of eBay Motors

2011 ◽  
Vol 101 (4) ◽  
pp. 1535-1546 ◽  
Author(s):  
Gregory Lewis
Keyword(s):  
Adverse Selection ◽  
Private Information ◽  
Web Page ◽  
Closing Price ◽  
Price Determinants ◽  
Used Goods Markets ◽  
Ebay Motors ◽  
Using Data ◽  
Adverse Selection Problem ◽  
Used Goods

Since Akerlof (1970), economists have understood the adverse selection problem that information asymmetries can create in used goods markets. The remarkable growth in online used goods auctions thus poses a puzzle. Part of the solution is that sellers voluntarily disclose their private information on the auction web page. This defines a precise contract -- to deliver the car shown for the closing price -- which helps protect the buyer from adverse selection. I test this theory using data from eBay Motors, finding that online disclosures are important price determinants, and that disclosure costs impact both the level of disclosure and prices. (JEL D44, D82, L81)

scholarly journals Adverse Selection in Durable Goods Markets

1999 ◽  
Vol 89 (5) ◽  
pp. 1097-1115 ◽  
Author(s):  
Igal Hendel ◽  
Alessandro Lizzeri
Keyword(s):  
Dynamic Model ◽  
Adverse Selection ◽  
Durable Goods ◽  
Used Goods Markets ◽  
Used Goods ◽  
Volume Of Trade

We present a dynamic model of adverse selection to examine the interactions between new and used goods markets. We find that the used market never shuts down, the volume of trade can be large, and distortions are lower than previously thought. New cars prices can be higher under adverse selection than in its absence. An extension to several brands that differ in reliability leads to testable predictions of the effects of adverse selection. Unreliable brands have steeper price declines and lower volumes of trade. We contrast these predictions with those of a model where brands physically depreciate at different rates. (JEL D82, L15)

scholarly journals Price Determinants of Stock-Type Horses Sold at Public Online Auctions

2020 ◽  
Vol 52 (4) ◽  
pp. 596-612
Author(s):  
Michelle L. Kibler ◽  
Jada M. Thompson
Keyword(s):  
Online Auctions ◽  
Sale Price ◽  
Online Sales ◽  
Factors Influencing ◽  
Stock Type ◽  
Price Determinants ◽  
Using Data

AbstractThere is a shift in livestock auction sales in consolidation of live markets and movement toward virtual marketplaces. We examine buyer preferences for nonracing stock-type horses sold through virtual auctions to better understand how animals are sold and their valuation. A shift towards online sales of equine has impacted the number of potential buyers through increased exposure to sale horses. Using data collected from online auctions, we estimate factors influencing propensity to sell as well as price determinants in this market platform. We find many factors contribute to the likelihood of a horse selling and to the final sale price.

scholarly journals When Salespeople Manage Customer Relationships: Multidimensional Incentives and Private Information

2019 ◽  
Vol 56 (5) ◽  
pp. 749-766 ◽  
Author(s):  
Minkyung Kim ◽  
K. Sudhir ◽  
Kosuke Uetake ◽  
Rodrigo Canales
Keyword(s):  
Moral Hazard ◽  
Adverse Selection ◽  
Customer Relationship Management ◽  
Private Information ◽  
Information Acquisition ◽  
Relationship Management ◽  
Selection Effect ◽  
Sales Performance ◽  
Customer Relationships ◽  
Customer Relationship

At many firms, incentivized salespeople with private information about customers are responsible for customer relationship management. Although incentives motivate sales performance, private information can induce moral hazard by salespeople to gain compensation at the expense of the firm. The authors investigate the sales performance–moral hazard trade-off in response to multidimensional performance (acquisition and maintenance) incentives in the presence of private information. Using unique panel data on customer loan acquisition and repayments linked to salespeople from a microfinance bank, the authors detect evidence of salesperson private information. Acquisition incentives induce salesperson moral hazard, leading to adverse customer selection, but maintenance incentives moderate it as salespeople recognize the negative effects of acquiring low-quality customers on future payoffs. Critically, without the moderating effect of maintenance incentives, the adverse selection effect of acquisition incentives overwhelms the sales-enhancing effects, clarifying the importance of multidimensional incentives for customer relationship management. Reducing private information (through job transfers) hurts customer maintenance but has greater impact on productivity by moderating adverse selection at acquisition. This article also contributes to the recent literature on detecting and disentangling customer adverse selection and customer moral hazard (defaults) with a new identification strategy that exploits the time-varying effects of salesperson incentives.

scholarly journals Clunkers or Junkers? Adverse Selection in a Vehicle Retirement Program

2012 ◽  
Vol 4 (4) ◽  
pp. 253-281 ◽  
Author(s):  
Ryan Sandler
Keyword(s):  
Public Policy ◽  
Cost Effectiveness ◽  
Adverse Selection ◽  
Local Program ◽  
Vehicle Fleet ◽  
Using Data ◽  
Smog Check ◽  
The Universe ◽  
Over Time ◽  
Vehicle Retirement

Vehicle retirement programs have become popular tools of public policy for reducing pollution. The efficacy of these programs is difficult to measure, as it is difficult to tell how much a vehicle would have polluted otherwise. I estimate that counterfactual using data from a long-running local program in California. I utilize the universe of emissions inspections from the California Smog Check Program to construct vehicle usage histories of retired cars and similar vehicles which did not retire early. I find that the program's cost-effectiveness steadily declined over time because of the depreciation of the vehicle fleet, while adverse selection remained a problem throughout. (JEL D82, Q53, Q58, R48)

scholarly journals When Private Information Settles the Bill: Money and Privacy in Google’s Market for Smartphone Applications

2019 ◽  
Vol 65 (8) ◽  
pp. 3470-3494 ◽  
Author(s):  
Michael Kummer ◽  
Patrick Schulte
Keyword(s):  
Private Information ◽  
Personal Information ◽  
Supply And Demand ◽  
User Group ◽  
Smartphone Applications ◽  
Difference In Differences ◽  
Android Market ◽  
Using Data ◽  
Google Play ◽  
Shed Light

We shed light on a money-for-privacy trade-off in the market for smartphone applications (“apps”). Developers offer their apps at lower prices in return for greater access to personal information, and consumers choose between low prices and more privacy. We provide evidence for this pattern using data from 300,000 apps obtained from the Google Play Store (formerly Android Market) in 2012 and 2014. Our findings show that the market’s supply and demand sides both consider an app’s ability to collect private information, measured by the apps’s use of privacy-sensitive permissions: (1) cheaper apps use more privacy-sensitive permissions; (2) given price and functionality, demand is lower for apps with sensitive permissions; and (3) the strength of this relationship depends on contextual factors, such as the targeted user group, the app’s previous success, and its category. Our results are robust and consistent across several robustness checks, including the use of panel data, a difference-in-differences analysis, “twin” pairs of apps, and various measures of privacy-sensitivity and app demand. This paper was accepted by Anandhi Bharadwaj, information systems.

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