Competition and Price Transparency in the Market for Lemons: Experimental Evidence

• 成果类型: Article
• 署名作者: Bochet, Olivier; Siegenthaler, Simon
• 署名单位: New York University; New York University Abu Dhabi; New York University; New York University Abu Dhabi; University of Texas System; University of Texas Dallas
• 刊物名称: AMERICAN ECONOMIC JOURNAL-MICROECONOMICS
• ISSN/ISSBN: 1945-7669
• DOI: 10.1257/mic.20170087
• 发表日期: 2021
• 页码: 113-140
• 关键词: ultimatum games; INFORMATION; uncertainty; fairness; search; expectations; performance; BEHAVIOR; offers

摘要

In markets with asymmetric information, where equilibria are often inefficient, bargaining can help promote welfare. We design an experiment to examine the impact of competition and price transparency in such settings. Consistent with the theoretical predictions, we find that competition promotes efficiency if bargainers cannot observe each other's price offers. Contrary to the predictions, however, the efficiency-enhancing effect of competition persists even when offers are observable. We explore different behavioral explanations for the absence of a detrimental effect of price transparency. Remarkably, implementing the strategy method improves subjects' conditional reasoning, delivering the predicted loss in efficiency when offers are observable.