2022 Fiscal Year Final Research Report
Experimentation in Online Markets
| Project/Area Number |
20K01560
|
|---|
| Research Category |
Grant-in-Aid for Scientific Research (C)
|
| Allocation Type | Multi-year Fund |
|---|
| Section | 一般 |
|---|
| Review Section |
Basic Section 07010:Economic theory-related
|
|---|
| Research Institution | Kyoto University |
|---|
Principal Investigator |
Chen Chia-Hui 京都大学, 経済研究所, 准教授 (20768238)
|
|---|
| Project Period (FY) |
2020-04-01 – 2023-03-31
|
| Keywords | rating system / online platform / adverse selection / dynamic game |
|---|
| Outline of Final Research Achievements |
Despite widespread use in online transactions, rating systems only provide summary statistics of buyers' diverse opinions at best. To investigate the consequences of this coarse form of information aggregation, we consider a dynamic lemons market in which buyers share their evaluations anonymously through a rating system. When the buyers have diverse preferences, the value of a good rating depends endogenously on the seller's pricing strategy, which in turn creates complicated dynamic interactions and results in stochastic price fluctuations. Occasional flash sales induced by the rating system yield a non-trivial welfare effect that stands in sharp contrast to standard adverse selection models: all buyers are weakly better off with information asymmetry than without. Incentivizing buyers to leave ratings may backfire by exacerbating the seller's strategic pricing incentives.
|
| Free Research Field |
Microeconomics
|
| Academic Significance and Societal Importance of the Research Achievements |
Papers studying social learning with online reviews indicate that online reviews help improve efficiency in social learning. However, the ease of information access also creates manipulations and generate additional costs. This project fills this gap between the existing literature and the reality.
|
