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Market transparency, adverse selection, and moral hazard

Author

Listed:
  • Klein, Tobias

    (Tilburg University, School of Economics and Management)

  • Lambertz, C.
  • Stahl, K.O.

Abstract

We study how seller exit and continuing sellers’ behavior on eBay are affected by an improvement in market transparency. The improvement was achieved by reducing strategic bias in buyer ratings. It led to a significant increase in buyer satisfaction with seller performance, but not to an increase in seller exit. When sellers had the choice between exiting—a reduction in adverse selection—and improving behavior—a reduction in moral hazard—, they preferred the latter because of lower cost. Increasing market transparency improved market outcomes.
(This abstract was borrowed from another version of this item.)

Suggested Citation

  • Klein, Tobias & Lambertz, C. & Stahl, K.O., 2016. "Market transparency, adverse selection, and moral hazard," Other publications TiSEM e1b72b65-7277-4991-8880-4, Tilburg University, School of Economics and Management.
    • Handle: RePEc:tiu:tiutis:e1b72b65-7277-4991-8880-4e8705e892a1
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    More about this item

    JEL classification:

    • D47 - Microeconomics - - Market Structure, Pricing, and Design - - - Market Design
    • D83 - Microeconomics - - Information, Knowledge, and Uncertainty - - - Search; Learning; Information and Knowledge; Communication; Belief; Unawareness
    • L15 - Industrial Organization - - Market Structure, Firm Strategy, and Market Performance - - - Information and Product Quality

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