Market Transparency, Adverse Selection, and Moral Hazard

Arbeitspapier

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.

Object Details

• Language: Englisch

References and Relationships

• Bibliographic citation: Series: Working Paper Series ; No. 14-25

Classification and Topics

• Classification: Wirtschaft ; Market Design ; Search; Learning; Information and Knowledge; Communication; Belief; Unawareness ; Information and Product Quality; Standardization and Compatibility
• Subject: Anonymous markets ; adverse selection ; moral hazard ; reputation mechanisms ; market transparency ; market design

Contributors, Places and Time

• Event: Geistige Schöpfung
• (who): Klein, Tobias J. ; Lambertz, Christian ; Stahl, Konrad
• Event: Veröffentlichung
• (who): University of Mannheim, Department of Economics
• (where): Mannheim
• (when): 2014

Further information

• Handle: http://hdl.handle.net/10419/129578
• URN: urn:nbn:de:bsz:180-madoc-372754
• Last update: 10.03.2025, 11:45 AM CET