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The Robustness of Lemons in Experimental Markets

Author

Listed:
  • Blake Dunkle

    (College of Law, University of Nebraska, Lincoln)

  • R. Mark Isaac

    (Department of Economics, Florida State University)

  • Philip C. Solimine

    (Department of Economics and Department of Scientific Computing, Florida State University)

Abstract

In this paper, we conduct a robustness study for the classic experimental results of Lynch et al. (1986, 1991). We find strong support for the original hypotheses in an updated experimental marketplace, consisting of dichotomous product qualities, non-binding signals of product quality, fixed seller identifiers, and an endpoint design of deliberate ambiguity. We show that fixed identifiers alone are not sufficient devices to support efficient outcomes in these updated market conditions.

Suggested Citation

  • Blake Dunkle & R. Mark Isaac & Philip C. Solimine, 2020. "The Robustness of Lemons in Experimental Markets," Working Papers wp2020_01_02, Department of Economics, Florida State University.
    • Handle: RePEc:fsu:wpaper:wp2020_01_02
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    File URL: https://coss.fsu.edu/econpapers/wpaper/wp2020_01_02.pdf
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    References listed on IDEAS

    as
    1. Gary E. Bolton & Elena Katok & Axel Ockenfels, 2004. "How Effective Are Electronic Reputation Mechanisms? An Experimental Investigation," Management Science, INFORMS, vol. 50(11), pages 1587-1602, November.
    2. Jordi Brandts & Gary Charness, 2004. "Do Labour Market Conditions Affect Gift Exchange? Some Experimental Evidence," Economic Journal, Royal Economic Society, vol. 114(497), pages 684-708, July.
    3. Bolton, Gary E. & Katok, Elena & Ockenfels, Axel, 2005. "Cooperation among strangers with limited information about reputation," Journal of Public Economics, Elsevier, vol. 89(8), pages 1457-1468, August.
    4. Seinen, Ingrid & Schram, Arthur, 2006. "Social status and group norms: Indirect reciprocity in a repeated helping experiment," European Economic Review, Elsevier, vol. 50(3), pages 581-602, April.
    5. George A. Akerlof, 1970. "The Market for "Lemons": Quality Uncertainty and the Market Mechanism," The Quarterly Journal of Economics, President and Fellows of Harvard College, vol. 84(3), pages 488-500.
    Full references (including those not matched with items on IDEAS)

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    Cited by:

    1. Solimine, Philip & Isaac, R. Mark, 2023. "Reputation and market structure in experimental platforms," Journal of Economic Behavior & Organization, Elsevier, vol. 205(C), pages 528-559.

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    More about this item

    Keywords

    Experimental markets; Replication and robustness; Consumer protection;
    All these keywords.

    JEL classification:

    • D4 - Microeconomics - - Market Structure, Pricing, and Design
    • D9 - Microeconomics - - Micro-Based Behavioral Economics
    • L1 - Industrial Organization - - Market Structure, Firm Strategy, and Market Performance

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