More analysts, better ratings: Do rating agencies invest enough in less developed countries?

Rating agencies' track record is good in developed countries but poor in emerging economies. Why? Given the almost-monopolistic structure of the industry, we conjecture that agencies might underinvest in information gathering. We propose an indicator quantifying the agencies' effort to gather information and assess whether greater effort affects rating levels. We detect: (i) absolute underinvestment for non-OECD sovereigns (less effort in spite of greater opaqueness); (ii) relative underinvestment for non-OECD firms compared with OECD ones (though the former receive a larger effort, more intense effort boosts firm ratings in non-OECD countries while depressing them in OECD countries).sovereign risk, credit ratings, rating agencies' effort

Engineering Trust - Reciprocity in the Production of Reputation Information

Reciprocity in feedback giving distorts the production and content of reputation information in a market, hampering trust and trade efficiency. Guided by feedback patterns observed on eBay and other platforms we run laboratory experiments to investigate how reciprocity can be managed by changes in the way feedback information flows through the system, leading to more accurate reputation information, more trust and more efficient trade. We discuss the implications for theory building and for managing the redesign of market trust systems.market design, reputation, trust, reciprocity, eBay

Engineering Trust - Reciprocity in the Production of Reputation Information

Reciprocal feedback distorts the production and content of reputation information, hampering trust and trade efficiency. Data from eBay and other sources combined with laboratory data provide a robust picture of how reciprocity can be guided by changes in the way feedback information flows through the system, leading to more accurate reputation information, more trust and more efficient trade.market design; reputation; trust; reciprocity; eBay

Please, talk about it! When hotel popularity boosts preferences

Many consumers post on-line reviews, affecting the average evaluation of products and services. Yet, little is known about the importance of the number of reviews for consumer decision making. We conducted an on-line experiment (n= 168) to assess the joint impact of the average evaluation, a measure of quality, and the number of reviews, a measure of popularity, on hotel preference. The results show that consumers' preference increases with the number of reviews, independently of the average evaluation being high or low. This is not what one would expect from an informational point of view, and review websites fail to take this pattern into account. This novel result is mediated by demographics: young people, and in particular young males, are less affected by popularity, relying more on quality. We suggest the adoption of appropriate ranking mechanisms to fit consumer preferences. © 2014 Elsevier Ltd

The Role of Cybermediaries in the Hotel Market

The advent of the Internet changed the way buyers and sellers interact. Although access to information seems unlimited, non-expert agents find it difficult to identify the information they can confidently use. A third-party expert or a cybermediary (an intermediary in the cyberspace) can help sort out the information for the contracting partners. In this paper, we study the case of the online hotel market and the role of the cyber travel agent (CTA). We claim that CTAs encourage hoteliers to exert effort in service quality and provide empirical evidence that these hotels are compensated with a price premium.Cybermediaries, Internet, travel agents, reputation, hotel market, Agricultural Finance, Institutional and Behavioral Economics,