Fixing feedback revision rules in online markets

Feedback withdrawal mechanisms in online markets aim to facilitate the resolution of conflicts during transactions. Yet, frequently used online feedback withdrawal rules are flawed and may backfire by inviting strategic transaction and feedback behavior. Our laboratory experiment shows how a small change in the design of feedback withdrawal rules, allowing unilateral rather than mutual withdrawal, can both reduce incentives for strategic gaming and improve coordination of expectations. This leads to less trading risk, more cooperation, and higher market efficiency.Series: Department of Strategy and Innovation Working Paper Serie

Essays on Market Design

“Market Design […] strives to understand how the design of marketplaces influences the functioning of markets” (Roth 2018, p. 1609). The simple but powerful rationale of market design is to improve markets by actively designing them, guided by economic theory, empirical data, and carefully designed economic experiments. In recent years, economists have been successful in designing a variety of institutions, including spectrum auctions, electricity markets, feedback systems, kidney exchanges, and school choice (Chen et al., 2020). This thesis consists of four chapters, all devoted to different aspects and areas of market design. Another unifying element of this thesis is the methodology. In all chapters, laboratory experiments are conducted, data are analyzed, and the results are linked to real-world applications. Laboratory experimental studies are a particularly useful tool in the context of market design. They are often compared to a wind tunnel, where the performance of existing designs is studied in a simplified environment or even new design ideas are tested in a controlled environment (Chen et al., 2020). The first chapter looks at auction design. We investigate the puzzle behind the popularity of a non-binding soft reserve price in practice. Here, we use the laboratory as a "wind tunnel" to compare the performance of different existing auction designs in a controlled environment. Chapter two focuses on the design of feedback systems. In this chapter, we propose a small but very effective modification to existing feedback withdrawal mechanisms. Therefore, we use the possibility of laboratory experiments to test a new design idea that has not yet been implemented in practice and for which, of course, no field data are available. The third chapter is concerned with the area of school choice. Here, I investigate the value of fairness to participants in school choice markets, which can guide a market designer in choosing an appropriate algorithm. A laboratory experiment allows for the observation and control of student preferences that are typically unobservable in field data. Finally, chapter four focuses on norm information acquisition. When designing real-world institutions, incentives must be aligned with behavior in terms of underlying goals (Bolton and Ockenfels 2012). Therefore, social norms, which are known to be a powerful force influencing behavior, are of great importance for market design. We study how economic agents choose between different types of norm information in a social choice context with uncertainty

An Experimental Examination of Competitor-Based Price Matching Guarantees

We use experimental methods to demonstrate the anti-competitive potential of price matching guarantees in both symmetric and asymmetric cost duopolies. Our findings establish that when costs are symmetric, price-matching guarantees significantly increase market prices. In markets with cost asymmetries, guaranteed prices remain high relative to prices without the use of guarantees, but the overall ability of price guarantees to act as a collusion facilitating device becomes contingent on the relative cost difference. Lesser use of guarantees, combined with lower average prices and slower convergence to the collusive level, suggest that the mere presence of cost asymmetries may curtail collusive behavior.Price Matching; Price Guarantees; Laboratory; Collusion

Existence and Warr Neutrality for Matching Equilibria in a Public Good Economy: An Aggregative Game Approach

Using the aggregative game approach as developed by Cornes and Hartley (2003, 2007) this paper analyzes the conditions under which matching mechanisms in a public good economy lead to interior matching equilibria in which all agents make strictly positive flat contributions to the public good. In particular we show that the distribution of income among the agents is a crucial determinant for the existence of interior matching equilibria. In addition, we explore which matching mechanisms show Warr neutrality and how the size of the economy affects the possibility of implementing a certain type of Pareto optimal solutions through matching.

ADVANCES IN THE THEORY OF LARGE COOPERATIVE GAMES AND APPLICATIONS TO CLUB THEORY : THE SIDE PAYMENTS CASE

In a series of papers (Kovalenkov and Wooders 2001a, Games and Economic Behavior, 2001b,Mathematics of Operations Research, and 1997, Journal of Economic Theory to appear), the authors have developed the framework of parameterized collections of games and also that of parameterized collections of economies with clubs. These papers apply to collections of games with nontransferable utility and similarly to economies with clubs and general preferences. The game theoretic framework encompasses the earlier `pregame' framework (cf., Wooders 1994b Econometrica) and also earlier models of economies with clubs and with possibly multiple memberships in clubs (cf. Shubik and Wooders 1982). In this paper, we consider the special case of games with side payments and illustrate the application of our more general results in this special, and much simpler but still important, framework. The motivation for this line of research is developed and application to environmental problems is discussed.cooperative games ; clubs ; core ; approximate cores ; widespread externalities ; multiple memberships ; local public goods

Football Championships and Jersey Sponsors' Stock Prices: An Empirical Investigation

Corporate sports sponsorship is an important part of many companies? corporate communication strategy. We take the example of major football tournaments to show that sponsorship indeed affects the sponsor?s (stock) market value. We find a statistically significant impact of football results (at an individual game level) of the seven most important football nations at European and World Championships on the stock prices of jersey sponsors. In general, the more important a match and the less expected its result, the higher its impact. In addition, we find a form of ?mere exposure?-effect which contradicts the efficient markets hypothesis.Sports sponsorship, Advertising, Stock market efficiency

Lab Labor: What Can Labor Economists Learn from the Lab?

This paper surveys the contributions of laboratory experiments to labor economics. We begin with a discussion of methodological issues: why (and when) is a lab experiment the best approach; how do laboratory experiments compare to field experiments; and what are the main design issues? We then summarize the substantive contributions of laboratory experiments to our understanding of principal-agent interactions, social preferences, union-firm bargaining, arbitration, gender differentials, discrimination, job search, and labor markets more generally.personnel economics, principal-agent theory, laboratory experiments, labor economics

Assets at marriage in rural Ethiopia

"This paper contributes to the economic analysis of marriage and the family by examining and analyzing the relative importance of potential determinants of assets brought to marriages in rural Ethiopia. One potential determinant is assortative matching, whereby the rich marry the rich and the poor marry the poor, generating a positive correlation between assets brought to marriage by both spouses. Another determinant explored is compensating parental transfers at marriage, whereby parents reduce assets transferred to their marrying children if their spouses bring more. The third determinant analyzed is parents' strategic behavior to improve the marriage-market ranking of their children by transferring more assets to them at the time of marriage." from TextIntrahousehold allocation ,Intergenerational transfers ,Marriage market ,Inheritance ,

Airbnb exits China: Insights from platform competition

Purpose: This study aims to provide insights into Airbnb’s exit from the China market, specifically from the perspective of platform competition. Design/methodology/approach: Based on the understanding of the evolution and competition of peer-to-peer (P2P) accommodation market in China and the double-edged network effects, this viewpoint article provides an in-depth discussion on Airbnb’s withdrawal from the China market. Findings: This viewpoint paper contends that Airbnb faced increasing challenges in establishing unique competitive advantages against local rivals, who demonstrate a capacity for innovation and maintaining loyal customers in adapting to the market evolution. Consequently, this may inhibit Airbnb from attracting the mainstream market and lead Airbnb into a negative spiral, exacerbated by indirect network effects. Originality/value: This study offers insights into the failure of an internationalisation process, drawing from an analysis of the competitive environment and the competition strategies of P2P accommodation platforms in China. These findings have practical implications for the implementation of international business strategies in P2P accommodation