Market Transparency, Adverse Selection, and Moral Hazard

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URL:	https://ub-madoc.bib.uni-mannheim.de/37275
URN:	urn:nbn:de:bsz:180-madoc-372754
Dokumenttyp:	Arbeitspapier
Erscheinungsjahr:	2014
Titel einer Zeitschrift oder einer Reihe:	Working Paper Series
Band/Volume:	14-25
Ort der Veröffentlichung:	Mannheim
Sprache der Veröffentlichung:	Englisch
Einrichtung:	Fakultät für Rechtswissenschaft und Volkswirtschaftslehre > VWL, Mikroökonomik (Stahl K.1988-2009, Em)
MADOC-Schriftenreihe:	Department of Economics > Working Paper Series
Fachgebiet:	330 Wirtschaft
Fachklassifikation:	JEL: D47 , D83 , L15,
Freie Schlagwörter (Englisch):	Anonymous markets , adverse selection , moral hazard , reputation mechanisms , market transparency , market design
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.