Beautiful Lemons: Adverse Selection in Durable-Goods Markets with Sorting

• 成果类型: Article
• 署名作者: Peterson, Jonathan R.; Schneider, Henry S.
• 署名单位: Nazarbayev University; University of Louisiana System; Louisiana Technical University; Queens University - Canada
• 刊物名称: MANAGEMENT SCIENCE
• ISSN/ISSBN: 0025-1909
• DOI: 10.1287/mnsc.2016.2495
• 发表日期: 2017
• 页码: 3111-3127
• 关键词: Microeconomics; market structure and pricing; industrial organization:firm objectives; Marketing; pricing

摘要

We document a basic characteristic of adverse selection in secondhand markets for durable goods: goods with higher observed quality may have more adverse selection and hence lower unobserved quality. We provide a simple theoretical model to demonstrate this result, which is a consequence of the interaction of sorting between drivers over observed quality and adverse selection over unobserved quality. We then offer empirical support using data on secondhand prices and repair rates of used cars from the Consumer Expenditure Survey, and discuss a number of implications for everyday advertising and consumer questions.