Review of Industrial Organization

, Volume 36, Issue 1, pp 1–16 | Cite as

More Information, More Ripoffs: Experiments with Public and Private Information in Markets with Asymmetric Information

Article

Abstract

It is well known that asymmetric information can be a catalyst for producing a lemons market. What is much less well known is how different institutional arrangements and their concomitant information conditions affect the lemons outcome. We conduct a laboratory experiment to examine the role that two different types of markets—two-sided multilateral negotiations and posted offers—play in an environment with sufficient conditions to yield a lemons outcome. We also investigate the effect that publicly available prices and advertisements have on buyers and sellers in a posted-offer market.

Keywords

Asymmetric information Laboratory experiment Lemons market Posted-offer Two-sided multilateral negotiations 

JEL Classification

D82 C91 

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Copyright information

© Springer Science+Business Media, LLC. 2010

Authors and Affiliations

  1. 1.Economic Science InstituteChapman UniversityOrangeUSA
  2. 2.Department of EconomicsUniversity of North Carolina CharlotteCharlotteUSA

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