LEARNING TRUST
- Author(s)
- Iris Bohnet, Steffen Huck, Jean-Robert Tyran
- Abstract
We examine the effects of different forms of feedback information on the performance of markets that suffer from moral hazard problems due to sequential exchange. As orthodox theory would predict, we find that providing buyers with information about sellers' trading history boosts market performance. More surprisingly, this beneficial effect of incentives for reputation building is considerably enhanced if sellers, too, can observe other sellers' trading history. This suggests that two-sided market transparency is an important ingredient for the design of well-functioning markets that are prone to moral hazard.
- Organisation(s)
- Department of Economics, Vienna Center for Experimental Economics
- External organisation(s)
- Harvard University, University College London
- Journal
- Journal of the European Economic Association
- Volume
- 3
- Pages
- 322-329
- No. of pages
- 8
- ISSN
- 1542-4766
- DOI
- https://doi.org/10.1162/jeea.2005.3.2-3.322
- Publication date
- 2005
- Peer reviewed
- Yes
- Austrian Fields of Science 2012
- 502045 Behavioural economics
- Portal url
- https://ucrisportal.univie.ac.at/en/publications/learning-trust(c6b486c2-d154-4f42-8d0b-1162a667105a).html