Pricing and trust

We experimentally examine the effects of flexible and fixed prices in markets for experience goods in which demand is driven by trust. With flexible prices, we observe low prices and high quality in competitive (oligopolistic) markets, and high prices coupled with low quality in non-competitive (monopolistic) markets. We then introduce a regulated intermediate price above the oligopoly price and below the monopoly price. In monopolies volume increases and so does quality, such that overall efficiency is raised by 50%. Somewhat surprisingly, the same pattern emerges in oligopolies. In fact, across all market forms transaction volume and traded quality are maximal in regulated oligopolies

Competition fosters trust

We study the effects of reputation and competition in a stylized market for experience goods. If interaction is anonymous, such markets perform poorly: sellers are not trustworthy, and buyers do not trust sellers. If sellers are identifiable and can, hence, build a reputation, efficiency quadruples but is still at only a third of the first best. Adding more information by granting buyers access to all sellers’ complete history has, somewhat surprisingly, no effect. On the other hand, we find that competition, coupled with some minimal information, eliminates the trust problem almost completely

Learning trust

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

AN EVALUATION OF ELECTRONIC MEETING SYSTEMS TO SUPPORT STRATEGIC MANAGEMENT

Strategic management, defined as the overall process of formulating and implementing goals, policies and plans of organizational strategy, is an important organizational task that is typically performed by groups of managers. While information technology has long been used to support strategic management, it has only recently been used to support the group processes of strategic management through the provision of Electronic Meeting Systems (EMS). An EMS can affect meetings by providing process support, process structure, task structure, and task support. Process support improves communication among group members (via an electronic communication channel), while process structure directs the pattern or content of discussion (via an agenda). Task structure refers to the use of a structured technique to analyze the task (a mathematical or conceptual model), while task support refers to the provision of information or computation support without additional structure (a data base or calculator). The objective of this paper is to evaluate the capability of EMS to support strategic management. The results of a series of seventeen case studies indicate that use of EMS technology can enhance six capabilities that prior research has linked to increased strategic management success. Process support and process structure were perceived to be more important than task structure and task support in contributing to success. An analysis of less successful meetings suggests that a lack of communication between the group leader/meeting organizer and meeting participants and extenuating external circumstances were primary causes for the lack of success

It is Hobbes, not Rousseau:an experiment on voting and redistribution

We perform an experiment which provides a laboratory replica of some important features of the welfare state. In the experiment, all individuals in a group decide whether to make a costly effort, which produces a random (independent) outcome for each one of them. The group members then vote on whether to redistribute the resulting and commonly known total sum of earnings equally amongst themselves. This game has two equilibria, if played once. In one of them, all players make effort and there is little redistribution. In the other one, there is no effort and nothingWe thank Iris Bohnet, Tim Cason, David Cooper, John Duffy, Maia Guell, John Van Huyck and Robin Mason for helpful conversations and encouragement. The comments of the Editor and two referees helped improve the paper. We gratefully acknowledge the financial support from Spain’s Ministry of Science and Innovation under grants CONSOLIDER INGENIO 2010 CSD2006-0016 (all authors), ECO2009-10531 (Cabrales), ECO2008-01768 (Nagel) and the Comunidad de Madrid under grant Excelecon (Cabrales), the Generalitat de Catalunya and the CREA program (Nagel), and project SEJ2007-64340 of Spain’s Ministerio de Educación y Ciencia (Rodríguez Mora).Publicad